The pact must be ratified by the international body, but the differences it leaves within the Argentine government are becoming increasingly evident

Argentina's Senate approves IMF agreement to refinance the nation's debt

AP/NATACHA PISARENKO - Argentina's president, Alberto Fernández

The Argentine Senate has approved the agreement between the International Monetary Fund (IMF) and the government of Alberto Fernández, through which it proposes to refinance the estimated debt of 45 billion dollars

This situation will reactivate the loan to restructure the stand-by programme of 2018, under the presidency of Mauricio Macri. This financing implied the payment of maturities of $19 billion this year, $20 billion more in 2023 and a final $4 billion in 2024, commitments that the Argentine economy cannot currently afford. 

Senate approval came after thirteen hours of debate, with 56 senators voting in favour of the deal, 13 against and three abstaining. The results resulted in the approval of the agreement and the Senate passed the agreement between the IMF and Argentina into law

AFP/JIM WATSON - Logotipo del Fondo Monetario Internacional (FMI) en la sede del FMI en Washington, DC

The vote also highlighted the internal crisis in the Argentine government, where tensions between Alberto Fernández and the vice-president, Cristina Kirchner, who leads the sector of the government most critical of the IMF, meant that Kirchner was not even in the Senate Chamber during the votes

Once the negotiations and the Argentine government's approval are over, the next step is in Washington, where the IMF presidency will assess the approval of the established agreements. This decision should not be delayed, since between 20 and 22 March 2022, Argentina will have to pay a maturity of 2.9 billion dollars, which it does not currently have, according to data from the Central Bank. 

Tension within the government 

Negotiations with the IMF have contributed to the erosion and increased tension within Fernández's government. Cristina Kirchner has taken a highly critical stance towards the IMF and has therefore taken the lead in the Argentinean ruling party's rejection of the approval of the new debt financing agreements

AP/NATACHA PISARENKO - El presidente argentino Alberto Fernández saluda mientras llega a pronunciar su discurso sobre el estado de la nación que marca la apertura de la sesión del Congreso de 2021

"I vote against the illegitimate debt left by Mauricio Macri and I vote against the International Monetary Fund, which once again, as since 1956, is once again imposing the conditions to repeat the cycles of indebtedness, social crisis, financial valorisation and capital flight", proclaimed Senator Nora Giménez

This situation has divided the government coalition into two separate groups in terms of their stance on the IMF. Senators such as Edgardo Kueider have called for a "responsible vote" and expressed their support for the new agreements: "I am going to firmly accompany my president of the nation, who is from my political space, who we were the ones who decided that he should be there, and we must not turn our backs on him in difficult times," he said. 

Despite the differences in his party, the president has achieved the necessary votes thanks to the support of the opposition party, Juntos por el Cambio, which rejects the situation, but sees the need for an agreement to refinance the debt.  

Long process of negotiations 

The agreements that have recently been approved by the Argentine Senate are the result of long talks and disagreements between the government and the IMF, to refinance the repayment of the 44 billion that Argentina received in 2018 during the Macri government. 

With the arrival of Alberto Fernández to the government, replacing Macri, the loan was rejected by the current president, who began talks to renegotiate the loan repayment conditions, as the maturity schedule far exceeds the value of the country's reserves.  

There are still challenges ahead that the IMF and Argentina will have to face, with rising oil, gas and food prices as a result of the war in Ukraine posing a new challenge for both agencies

"This will be a challenging task in light of the evolving global environment, as rising commodity prices are affecting inflation around the world," said Fund communications director Gerry Rice on Thursday

Americas Coordinator: José Antonio Sierra