Argentina says to agree economic plan with IMF staff before sending it to congress

Argentina's Economy Minister Martin Guzman poses for a picture before an interview with Reuters at the Economy Ministry, in Buenos Aires
FILE PHOTO: Argentina's Economy Minister Martin Guzman poses for a picture before an interview with Reuters at the Economy Ministry, in Buenos Aires, Argentina December 10, 2020. Picture taken December 10, 2020. REUTERS/Agustin Marcarian

November 19, 2021

By Hugh Bronstein and Nicolás Misculin

BUENOS AIRES (Reuters) – Argentina’s government plans to agree on its new multiyear economic plan with International Monetary Fund staff before sending the proposal to Congress, Economy Minister Martin Guzman said on local radio on Friday.

“First, we will seek to reach an agreement with IMF staff, and then it will be sent to Congress for ratification,” the minister said in comments to local station Radio Con Vos.

Earlier in the day, a government source, who asked not to be named, outlined the same plans in an interview with Reuters. The IMF did not respond to a request for comment.

After getting walloped in a recent midterm congressional election, the administration of President Alberto Fernandez is facing political headwinds as average Argentines struggle with high poverty rates and inflation of more than 50% a year that has gutted their spending power.

Guzman told the radio interviewer that no abrupt devaluation of the local peso currency was being planned, despite rampant market speculation to the contrary as the local peso has weakened 20.4% over the last 12 months.

The Argentine government would also like to resolve the rollover of $45 billion in outstanding debt owed to the IMF this year, Guzman added.

President Fernandez, whose Peronist coalition needs to win back voters ahead of 2023 presidential elections, has vowed not to cut government spending in a way that would derail Argentina’s recovery from a long recession exacerbated last year by the COVID-19 pandemic.

After gaining IMF staff approval, the economic plan will be debated in a Congress with opposition parties emboldened by their strong showing in the midterm vote.

“The entire ruling coalition is aligned with a vision of how this problem is to be solved. We seek an agreement, but not just any agreement; an agreement that allows Argentina to continue on the path of recovery,” Guzman told Radio Con Vos.

The government forecasts growth of more than 9% this year after the economy shrank 9.9% in 2020.

The government, unable to make payments that next year total almost $19 billion, has been locked in talks with the IMF since last year to push back $45 billion left over from a failed loan agreement in 2018 under former President Mauricio Macri.

(Reporting by Hugh Bronstein; editing by Jonathan Oatis)