Argentina and IMF find agreement on restructuring debt. Needs to be approved by lawmakers

Facing difficulties to reimburse the IMF, Argentina found an agreement to restructure its debt. But it is unclear whether lawmakers will approve it.

Alberto Fernandez, president of Argentina
Alberto Fernandez, president of Argentina, during an inauguration in February 2022

Argentina’s government announced on March 3 that it reached a deal with the International Monetary Fund to refinance some $45 billion in debt.

The deal would allow Argentina to begin repaying its debt starting in 2026, and continue through 2034, the economy ministry said in a statement. The existing arrangement had concentrated payments in 2022 and 2023.

Argentina has been trying to avoid default for the biggest loan program that the IMF had ever granted for a country at the time. At the time, it was the biggest loan program that the IMF had ever granted to a single country. The deal was made in 2018 by President Mauricio Macri, which the current administration never forgets to blame.

However, revised terms must be approved first by Argentina’s Congress and then by the IMF’s executive board to take effect.

It is unclear whether the measure would be approved by lawmakers in Argentina.

Some of the government’s legislative coalition, like the son of Vice President Cristina Fernández, who was president from 2007-2015, have already signaled their opposition.

IMF is perceived to be forcing Argentina to adopt austerity measures.

In the statement, the government said the country will aim at achieving a primary budget deficit of 2.5% of the gross domestic product in 2022, then decreasing to 1.9% in 2023 and 0.9% in 2024. Primary deficit excludes interest payments. President Alberto Fernandez in 2021 cut spending and had already reduced it to 3%, from 6.5% in 2020.

A committee in Congress’s lower house is expected to begin debating the issue Monday.

But time is pressing as the country faces a payment deadline on March 22 with the IMF. It will have to pay $2.8 billion.

The IMF said in a statement that the new program is “pragmatic and realistic” and that it aims to address Argentina’s high and persistent inflation through reduced financing of the nation’s fiscal deficit.

It will “strengthen macroeconomic stability and attend to the deep challenges facing Argentina,” the statement said.

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