Argentina prepares to ratify new program for $45 billion with IMF

The Argentine Senate will hold a final debate on Thursday to approve a new agreement with the International Monetary Fund (IMF) for $45 billion, which will try to stop the ghost of default and curb runaway inflation of more than 50% per year.

This loan will help to restructure the waiting program received in 2018 under the government of the liberal Mauricio Macri. The government of Mauricio Macri (Mauricio Macri) is about $19 billion this year, 20 billion dollars in 2023, and Argentina can't afford it.

The Senate meeting is scheduled for 17H00 GMT one week after the House of Representatives voted favorably. The agreement must then be submitted to the IMF Board of Directors in Washington for approval.

And time is scarce. According to the Central Bank, Argentina will have to pay a capital maturity of $2.9 billion between March 20 and 22, which is the amount that it does not hold.

“It is the responsibility of our government to build certainty in the context of uncertainty,” said Economy Minister Martín Guzmán when presenting the program to the Senate this week.

The new credit agreement will be the 13th time Argentina signed with the IMF after the return of democracy in 1983.

- Against inflation -

This extended facility program offers 10 quarterly reviews and a 4-year grace period.Payments must be made between 2026 and 2034.

In return, Argentina is committed to reducing its fiscal deficit from 3% of GDP in 2021 to 0.9% in 2024.

“If the program is approved, the degree of uncertainty decreases slightly. The possibility of default disappears and the goals that the government will try to achieve are set. Although not all unknowns will be resolved, economic agents know that there will be a supervisory authority (IMF).” Victor Beker, director of the Center for Research in New Economics at the University of Belgrano, told AFP.

According to the IMF, the objective is to “continue to address sustained high inflation (within the country) through a multi-strategy that includes a reduction in monetary financing of the fiscal deficit and a new framework for the implementation of monetary policy.”

If the IMF Board approves the agreement, Argentina will receive a first payment of about $98 billion, which will allow it to resolve the next week's maturity and strengthen its international reserves.

However, there is distrust in society about the actions that the government will take to achieve the goals of the agreement.

“With regard to the economic situation, we are going to get worse. This is the reality, we are paying for fraud,” said Monica Sulle of the Socialist Workers Movement in protest against the IMF this week, telling AFP.

The initial contract was signed at $57 billion, the highest amount granted by the IMF; however, Argentina was only $44 billion when Central Left President Alberto Fernández gave up the pending phase when he took office in December 2019.

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