NEW YORK, March 3– Argentina and the International Monetary Fund have reached a 30-month Extended Fund Facility staff-level agreement that will enable the South American nation to access USD45 billion to rebalance its balance of payments and budget, the multilateral lender announced today in a statement.

The program, known as EFF, will help Argentina to deal with its “most pressing economic challenges and to enhance the prospects of all Argentines by implementing measures designed to promote growth and protect essential social program,” the IMF said. The accord ends months of negotiations and completes an agreement in principle announced by Argentina’s president Alberto Fernández on January 28.

The staff-level agreement will be reviewed by the IMF’s Executive Board once the Argentine National Congress approves the economic and financial program, the statement said.

The IMF staff and the Argentine authorities reached a consensus “on a pragmatic and realistic program,” said Julie Kozack, Deputy Director of the Western Hemisphere Department, and Luis Cubeddu, Mission Chief for Argentina, in the statement. The pact is anchored on “credible economic policies to strengthen macroeconomic stability and to address Argentina’s deep-rooted challenges to sustainable growth,” the added.

Argentina’s economy contracted 9.9% in 2020 under the COVID-19 pandemic, to recover 10.3% last year according to government data. In its economic projection of January 25, the IMF projects an expansion of 3% this year while the Ministry of Economy calculated a growth of 4% in the 2022 Budget.

To the Congress

Argentina’s Economy ministry said it’s sending the agreement to the Congress today where it’s expected to pass. Lawmakers will also have access to the the Memorandum of Economic and Financial Policies and the Memorandum of Technical Understanding, the Ministry said in a statement.

The formal review of the agreement is set to begin on Monday in the Budget Commission of the House, chaired by Carlos Heller of the ruling coalition Frente de Todos. Economy minister Martín Guzmán, chief of staff, Martín Manzur, the president of the Central Bank, Miguel Pesce, and the main negotiator of the accord, Sergio Chodos, are expected to brief lawmakers on the details of the deal with the multilateral lender. Chodos is the Southern Cone representative at the IMF.

Representatives from trade unions and business organizations are expected to attend the parliamentary commission on Tuesday. The ruling party expects to discuss the agreement Wednesday and proceed to its approval (or rejection) by March 11.

If the agreement is voted affirmatively in Deputies, the bill will immediately go for its final discussion to the Senate, chaired by Cristina Fernández de Kirchner. When opening the period of legislative ordinary sessions last Monday, President Fernández send a clear message to the lawmaker: “We need you to accompany us and I thus appeal to the national commitment of everyone. Starting this week we hope that it will be in the hands of the legislators.”

The ruling party expect to have the support opposition coalition Juntos por el Cambio. It’s still up in the air what role Máximo Kirchner, the son of late president Nestor Kirchner and Cristina Fernández de Kirchner, will play in the discussions after resigning as head of the Frente de Todos legislative bloc. Mr. Kirchner, who may steer the vote of as many as thirty lawmakers of the 118 that the ruling party has, quit his jo weeks ago criticizing the terms of the agreement with the IMF.

A new agreement with the IMF will replace a failed three-year USD57mm stand-by program approved in June 2018 and signed by the government of former President Mauricio Macri.

NOTE: Updated at 2:51pm EDT to add five paragraphs at the end of the story on Congress’ discussions.

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Horacio Aizpeolea
Buenos Aires
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Leandro Gabin
Buenos Aires
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Jose Enrique Arrioja
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