Argentina avoids default as Congress passes IMF Agreement.
The Argentine Senate passed the country’s most recent agreement with the IMF over the resistance of influential politicians, including the vice president’s son. Passage of the bill should prevent a default on $19 billion of government debt, Al Jazeera reports, and delays IMF debt repayments until 2026. However, the final 56 to 13 vote came amid fierce street protests against spending reductions.
The traditionally anti-austerity Peronist government committed to eliminating certain subsidies, reducing spending, halting monetary financing, devaluing the peso even more, and further increasing interest rates. Investors, however, are skeptical that a divided and unpopular administration facing elections in 2023 can keep the new arrangement on track and deliver on the IMF’s conditions, the FT’s Lucinda Elliott reports.
While a delay might stay default, the Argentine economy remains in critical condition with inflation over 50%, pressure building on the local exchange rate, and dollar reserves so low that some analysts estimate that central bank reserves are in negative territory.