Reacting to the results of Sunday’s midterm legislative elections, President Alberto Fernández delivered a pre-recorded speech to the nation in which he tried to convey “certainties” on the economic front.
Among other things, he ratified that Economy Minister Martín Guzmán would remain in his post going forward and acknowledged the need to agree a new agreement with the International Monetary Fund. He was careful to explain, however, that the plan would not involve austerity.
"In this new stage we will deepen our efforts to reach a sustainable agreement with the IMF," declared the Peronist leader.
Along these lines, Fernández explained that he plans to present a "multi-year economic programme for sustainable development,” which will include "the best understandings that our government has reached with the IMF staff in negotiations led by our economy minister, Martín Guzmán."
The future of the top man at the Palacio de Hacienda and his post has been the subject of great speculation since the government’s defeat in the PASO primaries. In recent weeks, Guzmán has been immersed in the political arena, even participating in meetings with key business leaders. This more electoral stance, however, has failed to dispel rumours of strained relationships with some of the ruling coalition’s more hard-line members.
Yet Guzmán undoubtedly has the president’s support – in Fernández’s speech on Sunday night, he assured that "in the first week of December of this year, we will send a bill to the National Congress that makes explicit the "Multi-year Economic Programme for Sustainable Development."
He said the plan would outline “the best understandings that our government has reached with IMF staff” without “renouncing the principles of economic growth and social inclusion."
The president also sought to clarify that this "programme" has the support of the entire coalition: "This is a political decision that has the full backing of Frente de Todos. It has been the fruit of joint work with the Vice-President of the Nation [Cristina Fernández de Kirchner], the President of the Chamber of Deputies of the Nation [Sergio Massa] and my Cabinet of ministers," he declared.
What we know
Strictly speaking, this is not the first time the government has trailed the idea of sending a multi-year economic plan to Congress. Back in late 2020, Guzmán advanced with the idea of a programme that would last at least three years, and which would include fiscal, inflationary and international reserve targets for the following years. The original idea was to share it with Congress in March of this year, after closing negotiations with the International Monetary Fund. However, the agreement did not materialise.
Now, the government is reviving the idea and some details are beginning to come to light:
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Reach an agreement with the IMF spanning 10 years; Principal would start to be repaid in the second half of 2026 and then there would be quarterly payments afterwards until 2032.
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Six-monthly reviews by the IMF would be encouraged.
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Between 2022 and 2025, the government in office should commit to a path towards fiscal balance, which should be achieved in three years.
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Argentina should commit to increasing Central Bank reserves and reducing the exchange rate gap.
According to the dictionary, being sustainable implies being "compatible with the resources available to a region or society." As the government enters its second term, it is under pressure from various quarters to seek greater certainty.
One way to deliver this would be to reach an agreement with the IMF, for which there will be no alternative but to draw up a plan. There are many who are hopeful that the president’s declaration on Sunday will begin to point the way.
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