Argentina and IMF reach preliminary agreement on refinance of $45 billion Macri-era debt
Argentine President Alberto Fernández announced that Argentina and International Monetary Fund (IMF) staff have reached a preliminary agreement to refinance $45 billion in debt borrowed during the right-wing Mauricio Macri administration in 2018-19.
The country will meet a $731 million payment due this week - but the IMF will reimburse, after signing, some $4.3 billion in principal paid so far by Argentina in order to strengthen nearly-depleted net Central Bank reserves.
Argentine Economy Minister Martín Guzmán, who has led negotiations with the IMF since President Alberto Fernández took office two years ago, obtained his request that IMF disbursements exceed scheduled repayments.
Payments to the IMF will thus be covered until September of next year by the IMF itself.
The program will likewise not require austerity for the next two years - though Guzmán agreed to gradually reduce "primary" fiscal deficits (i.e. excluding debt service) from 3% of GDP in 2021 to 0% by 2025, while maintaining critical current account surpluses.
And unlike past IMF programs, the agreement envisages no labor law deregulation, state layoffs, or changes to public pensions.
The agreement, however, needs ratification by both the IMF board and Argentina's Congress to take effect - a tall order given that Fernández's right-wing opposition, which sees political benefit from a default, has vowed to oppose any agreement.
A drubbing in the 2021 mid-terms left Fernández's center-left Front for All with razor-thin majorities in both houses.
Argentina had earlier refinanced $66 billion in privately-held foreign debt - around a third of the total.
At: https://www-eldestapeweb-com.translate.goog/economia/deuda-con-el-fmi/el-gobierno-anunciara-un-acuerdo-con-el-fmi-sin-ajuste-que-preve-una-baja-del-deficit-de-1-punto-en-dos-anos-20221281130?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp
IMF Managing Director Kristalina Georgieva and Argentine President Alberto Fernández during their first in-person meeting in Rome last May.
Today's historic agreement, if ratified, would avert Argentina's default on a record, $45 billion IMF bailout granted to former right-wing President Mauricio Macri during his failed, 2019 re-election bid.
The bailout was reportedly granted at former President Donald Trump's behest - over the IMF board's objections - during Christine Lagarde's tenure.
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As you can imagine, Biden had been lobbied hard by conservative pundits, right-wing Latin American elements - and even by Argentine congresscritters like Luciano Laspina (a kind of Argentine Matt Gaetz) - to boycott this agreement.
Biden, in his well-known wisdom, rejected these pressures - which he no doubt saw as nakedly political.
Of course, that still leaves Macri's debt - which, even rolled over as it will be (pending ratification), will be a heavy burden for Argentina for years to come.
Even under a favorable scenario (high commodity prices, relative global stability, no more Macri-like regimes in Argentina, etc.), I don't see them paying those $45 billion off until 2040 or so.
It was like having your teenager take a YOOGE equity loan in your name, gamble it all in Vegas, and then keep the winnings - but sticking you with the debt (which you couldn't get out of). It was that bad.
That said, thanks as always, Judi. Have a great weekend. 