After more than a year of negotiations, the Board of Directors of the International Monetary Fund (IMF) approved an agreement with Argentina over the weekend that gives the deeply indebted and crisis-ridden country more time to pay off around $44 billion in debt to the IMF.

At the same time, Buenos Aires will be granted a new loan of around $9.7 billion to stabilize the balance of payments.

Tjerk Bruhwiller

Correspondent for Latin America based in São Paulo.

  • Follow I follow

The deal replaces a deal signed in 2018 for a record $57 billion loan under the previous liberal government of former President Mauricio Macri.

Argentina would not have been able to meet the outstanding liabilities from this contract, most of which would have been due this year and next.

The country looks back on a longer period of recession, is struggling with an extremely high inflation rate of over 50 percent last year and an increase in poverty to around 40 percent.

In the new agreement, the IMF makes a lot of concessions to Argentina.

In its statement, the Governing Board expressed the desire for structural reforms in order, among other things, to strengthen the investment climate and increase the efficiency and transparency of public spending.

However, the specific requirements for Argentina are limited and are essentially limited to reducing the budget deficit from 3 percent last year to 0.9 percent in 2024, reducing inflation and cutting energy subsidies.

The IMF wants to review progress regularly, but has already indicated a certain skepticism.

IMF boss Kristalina Georgieva spoke of "extraordinarily high" risks in view of the effects of the Ukraine war and with reference to the rising commodity prices.

In addition to the external risks, there are also internal risks in Argentina.

The new agreement with the IMF has led to a conflict within the left-wing governing coalition.

The radical wing around the former President and current Vice President Cristina Kirchner as well as various trade unions and movements are critical of the agreement.

Despite the low conditions, they fear that the agreement could become an additional burden for the population.

When the Argentine Congress voted on the agreement two weeks ago, demonstrations and riots broke out in Bueno Aires.

The political scenario is likely to become even more complex as next year's presidential election approaches.