Argentina’s lower house has approved President Milei’s request for a new IMF loan to bolster foreign reserves amid economic instability. The 10-year loan follows significant borrowing from previous administrations. Protests against austerity measures are ongoing, illustrating public dissent. Milei aims to utilize the funds to address inflation and debt repayments while maintaining a contentious fiscal strategy.
On Wednesday, Argentina’s Chamber of Deputies approved President Javier Milei’s request to initiate a new loan agreement with the International Monetary Fund (IMF). This new arrangement seeks to secure a 10-year loan to supplement the US$44 billion borrowed in 2018 under former President Mauricio Macri, aiming to strengthen the Central Bank’s foreign currency reserves and manage impending debt repayments.
The exact sum of the prospective loan remains undisclosed, although it is expected to feature a grace period of four and a half years for repayments. Current negotiations with the IMF are ongoing, yet crucial information regarding these talks has not been made public. Following recent currency policy discussions, the Argentine peso reached its lowest value in over five months on the parallel market.
Per the existing law from 2021, President Milei must seek authorization from both Congressional chambers to finalize agreements with the IMF; however, an emergency decree requires approval from only one chamber. The vote, which passed with 129 votes in favor, 108 against, and six abstentions, empowers Milei to conclude the loan agreement.
Despite being a minority in Congress, Milei’s administration was supported by several political factions including La Libertad Avanza, the right-wing PRO party, and the centrist Unión Cívica Radical. He celebrated the result on social media, describing it as a reflection of “maturity and greatness.”
Simultaneously, thousands of protesters gathered outside Congress, expressing discontent with Milei’s austerity measures and pension cuts. Demonstrators voiced concerns over past agreements with the IMF, claiming that such measures have historically worsened their financial situations.
Amid fluctuating economic conditions, President Milei has emphasized that the new loan would assist in settling debts owed to the Central Bank and combat Argentina’s persistent inflation. Since taking office in December 2023 and implementing spending cuts, inflation rates have decreased, although poverty has increased.
The government has initiated discussions with the IMF for a new extended fund facility (EFF) intended to refinance the substantial debt incurred under Macri’s tenure. Access to new funds from the IMF is viewed as essential to bolster foreign reserves and stabilize the economy, as the Central Bank has recently used significant resources to support the peso’s valuation.
In conclusion, President Javier Milei’s government has received Congressional approval to negotiate a new loan with the IMF essential for managing Argentina’s economic challenges. Despite public protests against austerity measures, the administration remains focused on stabilizing the economy through aggressive fiscal policies. The anticipated loan aims to bolster foreign currency reserves and mitigate inflation, although concerns persist regarding the consequences of IMF agreements on ordinary citizens.
Original Source: www.batimes.com.ar
