Argentina‘s $45 billion debt deal with the International Monetary Fund was approved by the country’s Congress on Thursday. Now it faces a final hurdle: the lender’s own board, which needs to sign off on the mega refinancing agreement.
The government struck a staff-level deal with the IMF in early March to replace a failed $57 billion program from 2018 that had been unable to keep the grain-producing country from slipping into economic crisis and a private sector default.
The IMF board is set to meet in the coming days to green-light the deal, which would unlock an initial nearly $10 billion disbursement, with the clock ticking ahead of a $2.8 billion repayment due early next week that the country will struggle to make.
“Now, the next step is the approval of the IMF board. We look forward to multilateral support. It will bring more stability to Argentina, Latin America, and the world,” Economy Minister Martin Guzman said after the Senate vote.
He said that without an agreement it would have been “impossible” for the country to pay back its obligations to the IMF, adding the deal was necessary — despite push-back from some lawmakers and protesters — to stabilize the economy.
“In this context of geopolitical conflict that raises international inflation in food and energy, it is of particular importance to provide certainty rather than more uncertainty.”
The new program would see funds disbursed over 30 months and a new repayment schedule between 2026-2034. It includes an economic program to reduce the fiscal deficit, bolster reserves, cut huge energy subsidies and push up real interest rates.
Not everyone in Argentina has rallied behind the deal, with concerns that economic strings attached will put pressure on people already grappling with both high levels of poverty and inflation, which is running at over 50% annually.
Gisella Lazcano, an activist protesting the deal, called it a “scam” and said the country should not pay the money back, echoing calls in recent street protests.
“The payment of that illegitimate debt is a burden on the shoulders of the working class,” she said.
The congressional approvals have helped buoy Argentine bonds, which have been languishing in distressed territory, despite concerns about whether the country, a serial defaulter, will be able to meet the economic targets.
“There is a certain amount of fear linked to the economic situation and the likelihood of concrete measures that affect people’s wallets,” said Esteban Neme from research firm Horus. “People are afraid of the adjustments that may be caused by the agreement, mainly the impact on the prices of products and services.”