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ECONOMY | 11-03-2022 10:07

Lawmakers in lower house approve deal with IMF to repay debt

Lawmakers in the lower house approve a deal with the International Monetary Fund to restructure US$45-billion debt; Senate must still vote to back deal.

Lawmakers in Argentina's lower house on Friday approved a deal with the International Monetary Fund to restructure a ruinous US$45-billion debt ahead of a vote in the upper chamber.

With 204 votes in favour, 37 against and 11 abstentions, the package obtained "an affirmative result and will be communicated to the honourable Senate," Lower House Speaker Sergio Massa said.

The details of the deal were ironed out between Argentine officials and IMF staff after an in-principle agreement in January.

"This is the best refinancing agreement that could be achieved," said ruling Frente de Todos coalition lawmaker Carlos Heller.

A rejection of the package "would lead us into serious problems that we must avoid at all costs," he added ahead of the session that lasted until early Friday morning.

In 2018, under the government of former president Mauricio Macri, the IMF approved its biggest-ever loan of US$57 billion to Argentina. The country has received US$44 billion of that amount.

Macri's successor Alberto Fernández refused to accept the rest, seeking also to renegotiate repayment terms. Payments of US$19 billion and US$20 billion were due this year – a timeline the government considered impossible. 

Argentina is just emerging from three years of economic recession and battling rising inflation and a high poverty rate.

Under the new deal, repayments will be made from 2026 to 2034 after a grace period.

 

Protests and violence

As well as going through the Senate, the package must also be ratified by the IMF board of directors before it comes into force.

Despite reluctance from a sector of Frente de Todos and the opposition coalition Juntos por el Cambio (Together for Change), a majority of lawmakers passed the refinancing deal, but many have questioned the economic programme that will accompany it.

"This is not the time for opportunism," said Juntos por el Cambio deputy Facundo Manes.

"The opposition must give [the government] the chance to restructure the debt, but we cannot take responsibility for the programme that the government negotiated with the IMF."

As expected, minority figures on the left and on the libertarian right were opposed to the agreement.

Head of the ruling coalition's caucus in the lower house, German Martínez, said the deal gave "time that allows us to consolidate, boost a process of economic recovery."

"That will allow us to be in better shape in four-and-a-half years to start facing the payments, and we are going to make them without adjustment," he declared.

Argentina hopes to reduce its fiscal deficit from 3.0 percent of GDP today to 0.9 percent by 2024.

There were protests against the deal outside parliament, with some demonstrators burning rubbish and throwing stones towards the building entrance.

A police officer was hit by a Molotov cocktail and some windows were hit with stones, including those at the offices of the Senate president and Vice-President Cristina Fernández de Kirchner.

 

– TIMES/AFP

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