Argentina’s Congress approved a decree enabling discussions with the IMF for a new loan agreement, crucial for financial recovery. This decision follows a divided vote in the lower house, with concerns from some lawmakers regarding the government’s bypassing of traditional legislative processes. As Milei implements austerity measures, public protests also arise amidst rising poverty rates.
Argentina’s lower house of Congress approved a crucial decree allowing the government to initiate negotiations with the International Monetary Fund (IMF). This approval follows President Javier Milei’s call for a new program, which is essential for addressing the country’s financial instability amidst its existing $44 billion repayment from 2022. The legislation passed with a divided vote in the Chamber of Deputies, consisting of 129 votes for, 108 against, and six abstentions.
The government argues that a new IMF deal is vital for enhancing the central bank’s stability, which would facilitate the easing of capital controls imposed since 2019, controls considered detrimental to business and investment growth. Despite Milei’s libertarian party holding a minority in Congress, he successfully navigated through some political obstacles with the support of conservative and moderate factions.
In response to the passing of the decree, Milei, alongside key advisers including his sister and Economy Minister Luis Caputo, expressed optimism on social media while financial markets reacted positively, demonstrated by a 4.5% increase in the local index IMV. On the other hand, dissent during the vote reflected concerns, notably from moderate Peronist Miguel Pichetto, who noted his support was critical, highlighting the need for more justifications regarding the decree’s urgency.
While Milei initiated austerity measures that have reportedly lowered inflation, they have simultaneously led to rising poverty levels, triggering public unrest and protests, particularly from pensioners affected by economic cuts. Anticipation of protests intensified ahead of the approval, following a violent clash at a previous retirees’ demonstration the week before.
The approval of the IMF loan plan by Argentina’s Congress is a critical step for the government in managing its significant debt and financial issues. The necessity for a new agreement with the IMF reflects ongoing economic challenges, including inflation and rising poverty. While the government celebrates this legislative victory, the concerns raised by opposition lawmakers and the potential for public unrest highlight the complexities of implementing further austerity measures.
Original Source: www.tradingview.com
