Argentina closed an agreement with the IMF to refinance debt of US $ 45,000 million

Argentina closed an agreement with the International Monetary Fund (IMF) to refinance its debt with the organization for US$ 45,000 million, through a new credit agreement that will be submitted to Congress and must be ratified by the IMF board, the Ministry announced. of Economy.

“The government will send to Congress this Thursday the agreement reached with the staff of the International Monetary Fund. The new program seeks to continue generating the necessary stability conditions to address existing structural challenges and strengthen the foundations for sustainable and inclusive growth”, he pointed out in a statement.

The IMF called the program “pragmatic and realistic, with credible policies to strengthen macroeconomic stability”, and the goal of “address the persistent high inflation (in the country) in a lasting way, through a multi-pronged strategy involving a reduction in monetary financing of the fiscal deficit and a new framework for the implementation of monetary policy”.

The preliminary agreement had been announced by Peronist President Alberto Fernández on January 28 and since then the technical teams have been dedicated to polishing the last details.

Deficit Reduction

The agreement reached, which would allow it to be approved to reschedule Argentina’s bulky maturities with the IMF, is known as extended facilities, and includes 10 quarterly reviews for two and a half years.

“The first disbursement will be made after the approval of the program by the IMF board. The rest of the disbursements will be made after each review is completed.”, indicated the ministry, explaining that the repayment period is ten years, with a grace period of four and a half years, so the debt must be paid between 2026 and 2034.

With this agreement, Argentina commits to reduce its fiscal deficit from 3% of the current Gross Domestic Product (GDP) to 0.9% in 2024.

One of the most difficult points in the negotiation was the elimination of subsidies on public service rates, especially gas and electricity, which will be done proportionally by income levels, according to presidential spokesperson Gabriela Cerruti.

Until now, the country had a stand-by agreement signed in 2018, during the presidency of the liberal Mauricio Macri, which contemplated payments of US$ 18,000 million this year and another US$ 19,000 million in 2023, a horizon that the current government considers it impossible to comply.

Congress, where the ruling party does not have a majority, will begin to debate the new understanding starting Monday and the government hopes that it will be approved before the end of March, when the payment of a capital maturity of about US$2.9 billion is scheduled.

“We are going to deal with a project (of law) that says that the debt refinancing program with the IMF is approved”, maintained the pro-government deputy Carlos Heller, president of the Budget Commission, explaining that the text must be approved or rejected without modifications.

The IMF executive board will analyze the request for the new program after the Argentine congress approves it, according to the IMF statement.

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