Argentina reached an agreement with the International Monetary Fund (IMF) on the debt of more than US$ 40 billion that the country owes to the entity. On the morning of this Friday, the 28th, President Alberto Fernández released the initial information, and in the early afternoon the agency confirmed the decision.
“The combined fiscal path would gradually and sustainably improve public finances and reduce monetary financing,” it said. The IMF highlighted that the agreement will increase spending on infrastructure and science and technology, in addition to protecting “focused social programs”.
“We had a problem and now we have the solution with the agreement,” the Argentine president said in a statement on Twitter. “With this agreement, we can build a future. Compared to previous agreements that Argentina signed, this agreement does not include restrictions that delay development. It does not restrict, does not limit and does not condition rights recovered in 2020,” he said.
Without cuts
Furthermore, according to Fernández, the agreement with the IMF does not oblige the country to carry out a labor reform or to reach a zero deficit. “There will be no drop in real spending, and there will be an increase in investments in public works,” he said. The president said the agreement will be submitted to Congress for approval. The IMF and Argentina also agreed that a strategy to progressively reduce energy subsidies “will be key to improving the composition of public spending”.
monetary police
There is also agreement on the implementation of monetary policy “as part of a multiple approach to face high and persistent inflation”. The framework aims to ensure positive real interest rates to support domestic financing and strengthen stability, the text says.
The communiqué says that there is also agreement that “additional financial support from Argentina’s international partners would help reinforce the country’s external resilience and its efforts to ensure more inclusive and sustainable growth”.
The Fund’s technical staff and the Argentine authorities will continue their work in the coming weeks to reach an agreement at the technical staff level. The final agreement will be subject to the approval of the IMF executive board, the note recalls.
‘Relief’
Capital Economics considered that the announcement “will provide some relief to international bondholders in the short term”. According to the consultancy, however, this is “just the beginning of a long journey to repair macroeconomic imbalances and there is still a lot that can go wrong in the coming years”.
The consultancy said, in a report to clients, that this is the 22nd agreement between the country and the Fund. “The news of this new deal is likely to give some relief to Argentine dollar sovereign bonds, which have been badly hit” recently, the consultancy said.
‘Moderately expansive’ fiscal policy
Argentine Economy Minister Martín Guzmán said that the agreement reached with the IMF will allow the country to have a “moderately expansive” fiscal policy. In a press conference, he said that the initiative will make Argentina “finance the debt, without undermining the economic recovery” or the creation of jobs.
Guzmán described the negotiations with the IMF as “really tough”, given the “magnitude of the damage inflicted on Argentina” by the previous agreement with the Fund, concluded in 2018 by then President Mauricio Macri. According to the minister, accepting the demands of the previous agreement “would undermine the chance to continue on the path of growth”.
The information is from the newspaper. The State of São Paulo.
know more
+ SP: Man dies standing, leaning against car, and scene scares residents on the coast
+ One twin became vegan, the other ate meat. Check the result
+ Reincarnation in history: an age-old belief
+ Andressa Urach asks for money on the internet: ‘Help me pay my card bill’
+ Horoscope: check today’s forecast for your sign
+ CNH: see what you need to know for the application and renewal
+ See which were the most stolen cars in SP in 2021
+ Expedition identifies giant squid responsible for ship sinking in 2011
+ Everything you need to know before buying a crockpot
+ US Agency warns: never wash raw chicken meat
+ What is known about fluorone?
+ Trick to squeeze lemons becomes a craze on social media
+ IPVA 2022 SP: see how to consult and pay the tax
#debts #billion #Argentina #closes #deal #IMF