Argentina parliament approves IMF deal for $45 billion debt, World News
Argentina’s Senate on Thursday gave final approval to a deal with the International Monetary Fund that restructures $45 billion in debt, clearing the country’s short-term financial horizon but leaving a serious inflationary challenge.
Late-night vote gives green light to ironed out new credit program between Argentinian officials and IMF staff as they seek to finalize debt, legacy of record loan taken in 2018 under former President Mauricio Macri.
In front of the Senate, several hundred people demonstrated, called by unions and left-wing movements to oppose the restructuring.
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Last week, the deal won the approval of the Chamber of Deputies with broad consensus between the ruling center-left coalition and the center-right opposition, a rarity in Argentina.
Faced with the specter of a ruinous default if the deal was not approved, the Senate gave it the green light by 56 votes to 13, with three abstentions.
“It’s our government’s responsibility to build certainty in a time of uncertainty,” said Economy Minister Martin Guzman, the deal’s chief architect, as he defended the package before senators.
The agreement provides for a series of macroeconomic measures to control the country’s chronic inflation (50.9% in 2021) and reduce its budget deficit by 3% of GDP last year until it reaches equilibrium in 2025.
Under the terms of the agreement, which must also be ratified by the IMF’s executive board before it takes effect, the fund will regularly monitor Argentina’s progress.
In 2018, under the centre-right Macri government, the IMF approved its biggest ever loan of $57 billion to Argentina. The country received $44 billion of this amount.
Macri’s successor, Alberto Fernandez, refused to accept the rest and sought to renegotiate repayment terms.
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Payments of $19 billion and $20 billion were due this year – a schedule the government considered impossible.
Argentina is just emerging from three years of economic recession and is struggling with rising inflation and high poverty rates.
The country recorded a 4.7% rise in its consumer price index in February compared to January, with a 7.5% rise in the cost of food.
Under the new agreement – the 13th Buenos Aires has signed with the IMF since democracy returned in 1983 – repayments will be made from 2026 to 2034 after a grace period.
Argentina has pledged to reduce its budget deficit from 3.0% of GDP today to 0.9% by 2024.
IMF spokesman Gerry Rice said the deal’s aim was to “reduce persistently high inflation”, but warned of the challenges facing the global economy after the invasion of Ukraine by Russia.
The parliament building was fenced off ahead of the Senate vote last week, following protests when the lower house approved the bill, with some protesters burning rubbish and throwing rocks towards the building’s entrance.
A police officer was hit by a Molotov cocktail and some windows were hit with rocks, including those in the offices of Senate President and Vice President Cristina Kirchner.