Argentina’s Congress Approves New IMF Loan for Economic Stabilization

Argentina’s Congress has authorized President Javier Milei to negotiate a new loan with the IMF, amid protests against austerity measures. The loan aims to boost foreign reserves and address debt obligations, with Milei claiming it will help combat high inflation, currently reduced to 66% from 211% at the end of 2023. Despite public dissent, the administration hopes to stabilize the economy with this new agreement.

On Wednesday, Argentina’s Congress provided President Javier Milei with authorization to negotiate a new loan agreement with the International Monetary Fund (IMF). This loan will be in addition to the existing $44 billion debt that Argentina owes to the IMF. The request was made by Milei on March 11, seeking a 10-year loan to replenish the central bank’s foreign currency reserves and to address upcoming debt obligations.

Though the exact amount of the proposed loan has not been disclosed, the approval allows Milei to finalize the arrangements with the IMF. In accordance with a law enacted in 2021, the president requires clearance from both houses of Congress; however, support from only one is sufficient. The vote resulted in 129 approvals, 108 rejections, and six abstentions from the Chamber of Deputies.

Despite his libertarian party holding a minority position in Congress, Milei has established temporary alliances to promote his fiscal policies. Concurrently, significant protests erupted near the legislature against both his austerity measures and dealings with the IMF. Public dissent was voiced, with some demonstrators expressing concern over the historical consequences of prior IMF agreements.

Rodolfo Celayeta, a 73-year-old retiree, remarked, “Every time something is agreed with the IMF, things get worse for us.” The protests have escalated compared to previous weeks, resulting in clashes between demonstrators and law enforcement, leading to injuries on both sides. According to Security Minister Patricia Bullrich, the security measures implemented with about 2,000 officers were effective in managing the situation.

Milei asserts that the funding from the new loan will enable the government to settle debts to the central bank and significantly tackle Argentina’s pervasive inflation issue. Currently, the country faces one of the highest inflation rates globally, which has seen a notable reduction under Milei’s administration—from 211 percent year-on-year at the close of 2023 to 66 percent presently. Since assuming office in December 2023, Milei has implemented drastic expenditure reductions, leading to both decreased inflation and increased poverty levels.

Negotiations with the IMF began in November concerning a new “extended fund facility” to succeed a previous agreement effective since 2022. This facility aims to facilitate the refinancing of Argentina’s outstanding debt incurred from a record $44 billion loan brokered in 2018 by then-president Mauricio Macri.

In conclusion, President Javier Milei’s success in Congress to secure a new IMF loan agreement signals a critical move towards stabilizing Argentina’s economic climate amidst high inflation and existing debt obligations. The authorization comes during a tense backdrop of public protests against austerity measures, reflecting the societal challenges the administration faces. With the goal of mitigating inflation and fulfilling debt responsibilities, this new financial endeavor represents a pivotal step in Argentina’s fiscal management under Milei’s leadership.

Original Source: www.rfi.fr