Argentina seals an agreement with the IMF but needs congressional approval to put it into practice

Understanding had been reached in January, but the rough edges of the negotiation still needed to be smoothed out. Lawmakers must approve the text before the end of this month, when a payment of US$ 2.8 billion is due.

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The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. Photo: REUTERS/Yuri Gripas/File Photo
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Argentina has struck a $45 billion debt deal with the International Monetary Fund (IMF), the country’s government and the IMF said on Thursday, after negotiations to smooth the final rough edges of the deal. A first understanding of the agreement had been reached in January.

“After intense negotiations, the government managed to seal an agreement with the IMF,” the Argentine Economy Ministry said in a statement, adding that the agreement would be sent to Congress on Thursday.

READ ALSO: Analysis: Argentina got what it wanted from the IMF

The IMF said that the two sides had reached a consensus among senior officials on an extended financing mechanism.

Presidential spokeswoman Gabriela Cerruti said the most challenging topic in the deal was how to raise energy prices, kept low through subsidies to the tune of $11 billion last year.

“The tariff issue was one of the most discussed and intensely negotiated,” she said at a press conference on Thursday. “But an understanding has been reached, and a path has been reached that serves the most vulnerable and moves forward in building reasonable tariffs that allow us to focus spending on generating employment and boosting the economy.”

READ ALSO: Argentina’s vice president Cristina Kirchner says IMF payments “cost more than COVID”

Argentina‘s Congress needs to approve the deal, and it needs to do it quickly, as the next payment this month is on the order of $2.8 billion.

The IMF agreement, which will roll out a $57 billion credit line from 2018, is critical to stabilizing the country’s economy, struggling with rampant inflation and dwindling foreign currency reserves.

According to Argentine President Alberto Fernández, if the agreement were approved, the country would start making payments to the IMF only in 2026 and would complete them by 2034.

(Translated by LABS)

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