This Monday begins the treatment of the project according to the International Monetary Fund (IMF) at Congresswith the participation of the Minister of Economy, Martin Guzmanwho attends the Chamber of Deputies next to the staff of that portfolio to expose before the Committee on Budget and Finance on the initiative to reschedule the payments of the loan contracted by former president Mauricio Macri.
The meeting of that commission began at 2:00 p.m. and, in addition to Guzmán, the chief of the Cabinet of Ministers, John Manzur; the head of the Central Bank, Miguel Pesce; the Secretary of the Treasury, Raul Rigoand the Argentine representative before the IMF, Sergio Chodosamong other officials, according to official sources.
Martín Guzmán spoke in Deputies regarding the agreement with the IMF
The Minister of Economy of the Nation, Martín Guzmán, assured that “the only alternative that Argentina has to face the maturities” with the International Monetary Fund (IMF) is the agreement reached with the multilateral organization and warned regarding the “destabilizing” that it may be for the country “not to have the conditions” to refinance the debt of 44,500 million dollars that former president Mauricio Macri contracted.
Guzmán, when participating in a plenary session of the Budget and Finance commissions with which the analysis of the project sent by the Executive Branch to Congress began, said that “it is a beginning solution to a very serious problem for the development of Argentina “.
Before Guzmán gave the technical details of the bill that contains the understanding reached with the multilateral organization, the chief of staff, Juan Manzur, outlined a political panorama of the scope and the need to approve said understanding.
Manzur said that the agreement “is the best possible” and maintained that it will allow “to consolidate the process of inclusion of the economy that has been manifesting since 2021”, while asking “to give it as much speed as possible” in the Chamber of deputies for approval.
“We are faced with a circumstance: Argentina does not have the funds to meet the 2022 and 2023 maturities. This is our responsibility: to avoid a scenario of generalized default for Argentina,” said the chief of staff.
He also assured that “what is being presented here is the best possible agreement. For this reason, I appeal to the art of dialogue, to generate the necessary consensus and to put sectoral issues and partisan politics above and think of the best for our country, for Argentina”.
“With this law, the purpose is that from now on the decisions that affect the future of Argentines go through the intervention of the representatives of the people and of all the provinces,” Manzur emphasized.
Guzmán, for his part, affirmed that the agreement with the multilateral organization “opposes the uncertainty that cannot result in anything better than deep exchange rate stress and negative consequences for inflation and for economic activity and employment.”
He also emphasized that “in this agreement there is no reform that implies the removal of rights. Neither is any pension or labor reform planned.
For the minister, “the accompaniment of the Congress is going to be decisive to act in a way that strengthens us as a Republic and as a Nation-State.”
During the participation of the legislators, Guzmán confronted Luciano Laspina, from Together for Change, who at the time of his questions accused the minister of “leaving a fiscal bomb until 2024” with a debt in pesos to finance the deficit and resort to Parliament to “associate the opposition and make the IMF politically guilty of an adjustment that they cannot avoid”.
“Deputy Laspina, it is difficult for me to find a situation in which such a conceptual weakness is exhibited, such as when they convert debt in pesos and financing from the Central Bank to the Treasury into foreign currency and speak of indebtedness in dollars,” Guzmán asserted when referring to his debates in academia, research and public policy makers.
In that sense, he asked himself: “What are we talking regarding? One wonders. If pesos and dollars were the same, then why, instead of allowing the outflow of capital in dollars, was the outflow of pesos not allowed in Argentina? Today we would have a very different situation from the point of view of the stability of the balance of payments”.
“Let me answer the question of what you call indebtedness in dollars, which it is not. There was talk of a debt accumulated during the government of Alberto Fernández of 90,000 million dollars. What did we do with the indebtedness in pesos and the financing of the Central Bank? We finance the public policies that allow Argentina to grow today by 10.3% in 2021”, replied the minister.
Guzmán also had a crossroads with Deputy Tetaz regarding the segmentation of energy rates contained in the memorandum with the IMF for the highest decile of economic capacity, a point in which the legislator insistently demanded “a number on the percentage of the rate increase What does the government plan to apply?
“As Economy Minister I don’t have the crystal ball to know what is going to happen in the world with the price of LNG,” said Guzmán, referring to the price volatility that this energy source has been experiencing in recent weeks and that Argentina will have to cope with the peak of winter demand.
In this sense, the minister explained that “what is proposed is that the subsidy is removed, therefore the impact depends on the cost of energy. It is not difficult for us to give a number, but if you read the program you will see that it is being defined the segmentation that is sought to be executed on June 1”.
“You ask me a question that is not relevant, because today it is not done. To define a price, you have to know what the costs are in which the price is defined, which includes those costs,” questioned the head of the Treasury Palace.
Summit of the Front of All for the treatment of the agreement with the IMF
The president of the Budget and Finance Commission of the lower house, Carlos Heller organized this Sunday a meeting between Guzmán and the deputies of the Front of All that make up the Budget and Treasury and Finance commissions to define the questionnaire and the official strategy before the presentation that the official will make tomorrow.
That meeting was attended by legislators from the ruling party such as Daniel Arroyo, Alicia Aparicio, Leandro Santoro, Marcelo Casaretto, Victoria Tolosa Paz, Julio Pereyra and Germán Martínez, the head of the FdT bloc, in addition to the body’s president, Sergio Massa, among others.
There Guzman andexplained “in detail” the entire agreed program and policies for the next three yearswhich is the period of commitments assumed, and which do not imply pension, labor or privatization reforms”, according to what was reported to Telam sources with participation in the meeting.
After more than half an hour of presentation, German Martinez and Massa enabled questions for the official and his team. “We want it to be a space to clear up all doubts and give certainty that here we negotiated firmly, defending the interests of Argentines at every second”they indicated.
When asked why it was not agreed upon earlier, Guzmán indicated that “it implied making an adjustment and obeying. And for our front, negotiating is never and never will be obeying,” the sources stated.
How the treatment schedule of the agreement with the IMF continues in Congress
Tuesday: Unions and businessmen
Representatives of the unions (General Confederation of Labor and Central of Argentine Workers); of social movements, of business entities, grouped in the General Business Confederation of the Argentine Republic (CGERA), the Assembly of Small and Medium Entrepreneurs (APYME), and the group of 6 (UIA, Camarco, CAC, ADEBA, SRA and the Stock Exchange) will attend the Congress on Tuesday.
The governors will also be invited so that they can speak in order to make known their opinions on the agreement.
Wednesday: Signature of the Opinion
According to the pre-arranged, on Wednesday it will be the turn of the internal debate of the plenary of the two commissions, a scenario that involves 49 legislators for the Budget and Treasury and 31 for Finance, which will be formally constituted on Monday at 1:00 p.m.
Thursday: Discussion
The objective of the ruling party is to sign an opinion that same Wednesday, so that the project can be discussed by the plenary of the Lower House in a special session that would be requested for Thursday or, at the latest, Friday.
Thus, it is expected that the draft agreement with the IMF arrives this Thursday at the venue for debate and subsequent voting. If approval is achieved, the bill must be turned over to the Senate for review.
IMF Final Approval
The agreement between the Argentine government and the fund’s staff must be reviewed and approved by the board of the multilateral organization for the program to begin execution.
reviews
Once approved by the IMF board, the new Extended Facilities agreement establishes ten reviews by the Fund’s staff to supervise that the Argentine Government is complying with the agreed objectives. Reviews will be quarterly.
What is the agreement with the IMF?
The agreement between Argentina and the IMF entered the Chamber of Deputies last Friday, consists of 137 pages and is divided into four documents: the bill with four articles, the message from the Executive Power signed by President Alberto Fernández and two annexes attachments.
This is the first time that an agreement with the IMF has been sent to Congress for approval.
According to the letter of the project sent to Parliament, the new program -called Extended Facilities- has a duration of 2 and a half years in terms of the commitments assumed, and consists of a refinancing of the debt taken in 2018 during the Macri administration.
The agreement will have 10 revisions and they will be quarterly with disbursements, while their payment will be between 2026 and 2034, which implies 4 and a half years “without sacrificing” money from Argentina to pay debt in these two and a half years, official sources highlighted.
Through the message sent to the Chamber of Deputies, the Executive Branch appealed to the “institutional responsibility of each and every one of the deputies and senators” to request “the urgent treatment of this bill.”
This is the Extended Facilities Program for the purpose of refinancing the existing debt between Argentina and the IMF, made up of the “Memorandum of Economic and Financial Policies” and the “Technical Memorandum of Understanding”, as well as the corresponding annexes.