Argentina’s Senate on Thursday gave final approval to an agreement with the International Monetary Fund that restructures a $45 billion debt, clearing the country’s short-term financial horizon but leaving a serious inflationary challenge.
The late-night vote greenlights the new credit program ironed out between Argentine officials and IMF staff as they sought to finalize the debt, the legacy of a record loan contracted in 2018 under former president Mauricio Macri.
Outside the Senate, several hundred people demonstrated, called by unions and leftist movements to oppose the restructuring.
Last week, the agreement won the approval of the Chamber of Deputies with a broad consensus between the center-left ruling coalition and the center-right opposition, a rarity in Argentina.
Faced with the spectre of a ruinous payment default if the agreement was not approved, the Senate greenlit it by a vote of 56 to 13, with three abstentions.
“It is the responsibility of our government to build certainty in a context of uncertainty,” Economic Minister Martin Guzman, the deal’s chief architect, said in defending the package before senators.
The agreement provides for a series of macroeconomic measures to control the country’s chronic inflation (50.9 percent in 2021) and reduce its budget deficit of three percent of GDP last year until it is balanced in 2025.
Under the agreement, which must also be ratified by the IMF board of directors before it comes into force, the fund will monitor Argentina’s progress regularly.
In 2018, under the government of center-right Macri, the IMF approved its biggest-ever loan of $57 billion to Argentina. The country received $44 billion of that amount.
Macri’s successor, Alberto Fernandez, refused to accept the rest and sought to renegotiate repayment terms.
Payments of $19 billion and $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.
The country recorded a 4.7 percent jump in its consumer price index in February compared to January, with a 7.5 percent rise in the cost of food.
Under the new deal — the 13th that Buenos Aires has signed with the IMF since the return of democracy in 1983 — repayments will be made from 2026 to 2034 after a grace period.
Argentina has committed to reducing its fiscal deficit from 3.0 percent of GDP today to 0.9 percent by 2024.
IMF spokesman Gerry Rice said the aim of the deal was to “reduce persistently high inflation” but warned of the challenges faced by the global economy following Russia’s invasion of Ukraine.
The parliament building was fenced off ahead of the Senate vote last week, following protests when the lower house approved the bill, with some demonstrators burning rubbish and throwing stones towards the building entrance.
A police officer was struck by a Molotov cocktail and some windows were hit with stones, including those at the offices of the Senate president and Vice President Cristina Kirchner.