The Argentine Senate began this Monday to discuss the draft agreement with the International Monetary Fund (IMF) to restructure the South American country's debt for about $45 billion, which has already been approved by the Chamber of Deputies.
“We welcome this process and encourage decision-making in the times and ways that allow Argentina in this very difficult global context; to be able to continue building certainties,” said Economy Minister Martín Guzmán, speaking to the Senators of the Budget Committee.
The government hopes that the Senate will give its final endorsement of the credit program in a plenary session this week, following its approval last Friday in Deputies by 204 votes in favor, 37 against and 11 abstentions.
For this agreement between the government of Alberto Fernández (centre-left) and the IMF staff to enter into force it must be ratified by the Argentine Congress and by the board of directors of the international organization.
“It is the responsibility of our government to build certainties in a context of uncertainties,” Guzmán insisted, referring to the war in Ukraine that causes the price of raw materials to rise, which the government fears will aggravate Argentina's inflation of 50% in 2021, one of the highest in the world.
The agreement will be used to refinance debt from the stand-by agreement granted in 2018 to Argentina during the government of liberal Mauricio Macri, which expects maturities of about $19 billion this year and another $20 billion in 2023, in addition to another $4 billion in 2024.
The new extended facilities program extends payment terms, provides for 10 quarterly reviews and a four-year grace period. Payments must be made from 2026 to 2034.
The new agreement, described by the IMF as “pragmatic and realistic,” commits Argentina to reducing its fiscal deficit from 3% of current GDP to 0.9% by 2024.
The project divided the ruling Frente de Todos alliance, one of whose sectors voted against, in addition to the radical left and the right, which is defined as libertarian, who opposed.
Once the agreement is ratified, Argentina will receive a first disbursement of about $9.8 billion, which will serve to pay a due date of 2.9 billion expected between 20 and 22 March and also to strengthen its international reserves.
Chief of Staff Juan Manzur, also present in the Senate, stressed that “normalizing economic and financial relations with the Monetary Fund and avoiding a default will allow a virtuous articulation between our capacities and productive potential and growing global demands.”
Argentina's international reserves are $37.3 billion, but liquid reserves are at critical levels.
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