Argentine Senate approved new agreement with the IMF for 45,000 million dollars

The Senate of Argentina approved this Thursday a new agreement with the International Monetary Fund for 45,000 million dollars, with which it conjures up the specter of default and will try to stop the runaway inflation of more than 50% per year.

This loan will serve to restructure the stand-by program received in 2018 during the government of the liberal Mauricio Macri, whose maturities for some 19,000 million dollars this year, another 20,000 million in 2023 and 4,000 million more in 2024 Argentina cannot afford.

The project obtained 56 votes in favor, 13 against and three abstentions, in a session that lasted almost 10 hours. The Plaza del Congreso was fenced off and under police surveillance, after a week ago, when the Chamber of Deputies approved the loan, protesters stoned the building and broke some windows, including those of Vice President Cristina Kirchner’s office.

With banners that said “No to the adjustment of the IMF” and “Fatherland or IMF”, the demonstrators were placed this Thursday in the streets surrounding the parliament for a few hours.

Agreement number 13

To enter into force, the agreement must now be submitted to the approval of the IMF board in Washington.

And time is short. Between March 20 and 22, Argentina must pay a capital maturity of 2,900 million dollars, an amount that it does not have, according to the Central Bank.

“We have to make a difficult decision: to approve the arrival of the IMF when we had freed ourselves in 2006,” said the official senator Ricardo Guerra, alluding to when during the mandate of the then president, Néstor Kirchner, the country canceled some 9,500 million dollars of debt with the multilateral organization and put an end to its review visits.

Guerra stressed that the IMF “only left bad experiences” in Argentina, but argued that it is necessary to approve the loan to “free the economy of such a burden, in order to return to growth, and recreate hope and credibility.”

The new credit agreement will be the 13th that Argentina has signed with the IMF since the return of democracy in 1983.

This extended facility program provides for 10 quarterly reviews and a grace period of four years. Payments must be made from 2026 to 2034.

In return, Argentina commits to reduce the fiscal deficit from 3% of GDP in 2021 to 0.9% in 2024.

Although the majority voted in favor, the center-right opposition of Together for Change warned that the measures contemplated are insufficient.

“This program is not enough, they have to change course. We are going to have problems of high inflation, shortages and possibly bank runs,” said opposition senator Alfredo Cornejo.

reduce inflation

The president of Argentina, the center-leftist Alberto Fernández, thanked the parliamentarians for supporting the project. “We are going to have a clearer horizon. We will know that there is a problem that has not been resolved, but that is beginning to be resolved, which is that cursed debt that we inherited,” he said, alluding again to the fact that the agreement was signed by Argentina under the government of his predecessor, in the midst of a currency run. .

The goal, according to the IMF, is to “reduce persistently high inflation.” However, spokesman Gerry Rice stated on Thursday that “this will of course be challenging in light of developments in the global economy, as rising commodity prices are affecting inflation around the world. ”, in the midst of the war in Ukraine.

Argentina registered an increase in the consumer price index of 4.7% in the month of February compared to January, with a 7.5% rise in the food category, with which inflation in 12 months was 52, 3%, one of the highest in the world.

When the IMF board approves the agreement, Argentina will receive a first disbursement of some 9,800 million dollars, which will make it possible to meet the due date next week and strengthen international reserves.

But there is mistrust in society about the measures that the government will adopt to meet the goals of the agreement.

“In relation to the economic situation we are going to be worse, that is the reality. We are paying for a scam,” Mónica Sulle, from the Socialist Workers Movement, told AFP during a protest against the IMF this week.

The initial agreement was signed for 57,000 million dollars, the highest amount that the IMF has granted so far. However, Argentina only received 44,000 million, as President Fernández renounced the pending tranches when he took office in December 2019. (I)