Argentina’s Congress granted President Javier Milei approval for a new IMF loan to enhance foreign currency reserves and manage debt payments, amid protests against austerity measures. Despite significant cuts leading to a decrease in inflation, poverty levels have risen, and concerns about the economic impact of such measures persist.
On March 11, 2023, Argentina’s Congress approved a request from President Javier Milei to negotiate a new loan with the International Monetary Fund (IMF), building upon the existing $44 billion loan agreement. The purpose of the prospective loan is to enhance the central bank’s foreign currency reserves and manage impending debt payments, although the specific amount of the new loan remains undisclosed.
A 2021 law requires the Argentine president to obtain authorization from both Congressional chambers for IMF borrowing, but support from only one is necessary to move forward. In this case, the Chamber of Deputies voted with 129 in favor, 108 against, and six abstentions, thereby enabling President Milei to advance with the agreement. Despite his small libertarian party being a minority, Milei has navigated political alliances to promote his cost-reduction agenda.
The vote was met with large-scale protests outside the legislature, where demonstrators expressed discontent over Milei’s strict austerity measures and his dealings with the IMF. However, this demonstration was notably more peaceful than previous protests that had resulted in injuries. President Milei contends that the new IMF loan is crucial for repaying the central bank and combating persistent inflation, which remains one of Argentina’s most pressing economic challenges.
Upon taking office in December 2023, Milei initiated significant reductions in public spending, subsequently resulting in a decrease in the inflation rate from 211 percent at the end of 2023 to 66 percent currently. The government’s negotiations with the IMF began in November, focusing on an “extended fund facility” (EFF) designed to refinance Argentina’s debts and manage the repayment of the considerable 2018 loan issued to former President Mauricio Macri. This loan was the largest ever granted by the IMF.
The approval of President Javier Milei’s request for a new loan from the IMF marks a significant development in Argentina’s ongoing financial management. While the loan aims to stabilize the economy, ongoing public protests reflect the contentious nature of austerity measures. As inflation rates have declined since Milei’s budget cuts, the socio-economic implications remain a critical area of concern for the nation’s populace.
Original Source: www.france24.com
