ARGENTINA

On January 28, the President of the Nation, Alberto Fernández, announced that “the Government of Argentina has reached an agreement with the International Monetary Fund (IMF)” to refinance the credit that the country contracted in 2018 for 44 billion dollars. According to what he indicated, he foresees that “there will be no drop in real spending and an increase in the National Government’s public works investment”, while at the same time “it does not provide for devaluation jumps”. Minutes later, the Chief of Cabinet, Juan Manzur, and the Minister of Economy, Martín Guzmán, provided details of the understanding. In order to become effective, the agreement must be approved by the Argentine Congress and by the IMF Board of Directors. 

 Fernandez assured that “compared to other previous agreements that Argentina signed, this agreement does not contemplate restrictions that postpone our development”. “It does not restrict, limit or condition the rights of our retirees that we recovered in 2020. It does not force us to a labor reform. It promotes our investment in public works. It does not impose us to reach a zero deficit. It does not impact on public services, it does not relegate our social spending and it respects our investment plans in science and technology”, he developed. In addition, the President remarked that, as a result of the agreement with the IMF, Argentina will be able to access new financing. 

Finally, the President asked the entire political spectrum to support the understanding reached. It should be noted that the agreement must be sent to the National Congress, in accordance with the provisions of Law 27,612 on Strengthening the Sustainability of the Public Debt. The law, approved in March 2021, provides that any financing program or public credit operation carried out with the IMF will require an act of Congress expressly approving it. 

Afterwards, the Chief of Cabinet, Juan Manzur, and the Minister of Economy, Martín Guzmán, gave a press conference. In this framework, Manzur, described the loan with the IMF as a “tragedy” and assured that the government of Mauricio Macri “irresponsibly indebted Argentina”. “The agreement with the IMF has a series of topics, but basically respects (…) the only thing we were asking for, that Argentina can continue growing. This was the ultimate goal sought by this agreement, which was what was achieved”, he expressed. 

Meanwhile, Guzmán indicated that “the State will be able to play a moderately expansive role” and that “there will be a gradual but decisive reduction of the monetary assistance provided by the Central Bank to the Treasury”. In addition, the Minister of Economy said that work will continue on the “reconstruction of the public debt market in local currency” in order to reduce monetary issuance and attend to public policies. Finally, he specified that the agreement reached is a “program of extended facilities to refinance the maturities of the stand by program carried out by the previous government” and will have a duration of two and a half years with reviews every three months by IMF executives. A summary of Guzman’s announcement of the Program can be accessed by clicking here.

On the other hand, on January 31, Máximo Kirchner announced his resignation as president of the Frente de Todos deputies’ block. When arguing his decision, the deputy pointed out that “this decision arises from not sharing the strategy used and much less the results obtained in the negotiation with the International Monetary Fund (IMF), carried out exclusively by the economic cabinet and the negotiating group that answers to and has the absolute confidence of the President of the Nation”. 

At the same time, Kirchner remarked that he will continue within the block “to facilitate the task of the President and his entourage” but that he will leave the Presidency so that Alberto Fernandez “can choose someone who believes in this International Monetary Fund program”. He added: “It would be more than wrong to hold on to the Presidency of the Block when it is not possible to accompany a project of such a decisive centrality in terms of the present and the years to come”.

Finally, on February 10, from Juntos por el Cambio, after the meeting of the National Board of the coalition, they communicated that “we see as positive the beginning of understanding that the government has initiated with the IMF”.  Furthermore, Patricia Bullrich, president of PRO, remarked that “we will never push Argentina into default”. Although they have not yet confirmed how they will vote on the eventual agreement in Congress, from the block they remarked the need to know the details of the agreement but expressed that “unless the agreement comes with unpleasant surprises such as tax increases or new taxes, Juntos por el Cambio will not do anything to prevent its treatment”.