Argentina’s Congress approved President Javier Milei’s request for a new IMF loan to bolster currency reserves and manage debt repayments, amidst ongoing protests against austerity measures. The significant vote permits him to finalize the agreement despite concerns about inflation and poverty. The new loan aims to alleviate Argentina’s economic challenges following austerity measures implemented since Milei took office.
Argentina’s Congress has granted President Javier Milei the authority to negotiate a new loan agreement with the International Monetary Fund (IMF), adding to the existing $44 billion debt owed to the lender. During his address on March 11, Milei sought approval for a prospective 10-year loan aimed at bolstering central bank reserves and managing impending debt obligations. The specifics regarding the total amount of the new loan have not yet been disclosed.
As dictated by a 2021 law, presidential authorization from both legislative houses is required for IMF borrowing, although only support from one house is necessary for the transaction to proceed. In a recent vote in the Chamber of Deputies, the lower house, Milei attained approval with 129 votes in favor versus 108 against, alongside six abstentions, thus enabling him to negotiate the agreement.
Although Milei’s libertarian party is not the majority in Congress, it has created strategic alliances to facilitate the implementation of its fiscal measures. The timing of the vote coincided with large demonstrations outside the legislature, where many voiced their opposition to Milei’s austerity initiatives and discussions with the IMF. Protestor Rodolfo Celayeta, a retiree aged 73, expressed concern by stating that agreements with the IMF tend to exacerbate their hardships. Fortunately, the protests were relatively peaceful compared to prior demonstrations that resulted in clashes with law enforcement.
Security Minister Patricia Bullrich reported that the operation involving 2,000 officers was “successful,” with only minor incidents occurring between demonstrators and the police. Milei aims for the new IMF loan to facilitate payments to the central bank and combat Argentina’s persistent inflation, which is among the highest globally.
Since taking office in December 2023, Milei’s aggressive public spending cuts have succeeded in reducing inflation from 211 percent annually at the end of 2023 to a current rate of 66 percent, although the poverty level has simultaneously increased. Additionally, the government has been engaged in discussions with the IMF since November regarding a new extended fund facility (EFF) to replace the 2022 agreement, which was crucial in refinancing the substantial $44-billion loan proposed during Maurico Macri’s presidency in 2018, marking the largest IMF loan to date.
In summary, President Javier Milei has received Congressional approval to negotiate a new IMF loan, further increasing the nation’s liabilities to the organization. This development comes amidst public protests against his austerity measures and signifies ongoing economic challenges, particularly concerning inflation and poverty. With these objectives in mind, the new loan agreement aims to stabilize Argentina’s economy while addressing immediate debt concerns and inflationary pressures.
Original Source: www.sanfordherald.com
