Argentina reaches new credit agreement with the IMF

Argentina reached a new credit agreement with the International Monetary Fund (IMF), which will alleviate the heavy payment burden of almost 40,000 million dollars that this country had to face between 2022 and 2023, President Alberto Fernández reported this Friday.

“I want to announce that the government of Argentina has reached an agreement with the International Monetary Fund,” the president said in a recorded address.

“We had an unpayable debt that left us without a present or a future and now we have a reasonable agreement that will allow us to grow and meet our obligations through our growth,” said the center-left president.

The agreement reached at dawn relieves the burden of debt maturities that was concentrated on this year (about 19,000 million dollars) and the next (another 20,000 million). In addition, there was another payment planned in 2024 for more than 4,000 million.

“This understanding plans to sustain the economic recovery that has already begun. It foresees that there will be no fall in real spending and an increase in investment in public works by the national government. Nor does it provide for devaluation jumps,” added Fernánddez.

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Specifically, Argentina promised to reduce its fiscal deficit to 0.9% of the Gross Domestic Product in 2024, with goals of 1.9% in 2023 and 2.5% in 2022, Economy Minister Martín Guzmán reported in a Press conference.

Last year, with economic growth of 10%, the deficit was 3%.

The agreement also foresees a growth in 2022 of 5,000 million dollars in international reserves, which currently amount to just over 38,000 million.

“The regulations on the financial account will continue,” Guzmán said. In Argentina, exchange control has been in force since mid-2019.

– ‘Tough negotiations’ –

The Fernández government formally began its talks with the IMF in August 2020. Throughout the negotiations, it insisted that the way to reduce the fiscal deficit is economic growth and not the reduction of public spending.

The agreement must be ratified by Congress. In addition, Guzmán indicated that “we still have to work on the memorandums of understanding and that will take a few weeks.”

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