Argentina repays IMF debt

Argentina faces a deadline today to repay nearly $370 million in debts to the International Monetary Fund (IMF).

Argentina made good on an additional $730 million in debt repayments on Friday, when the country struck a deal with its largest creditor for a $44.5 billion standby deal. The new program replaces a failed $57-billion loan from the Fund, the largest in the organization’s history. 

The new deal delays repayments while protecting infrastructure and social spending as well as drawing down energy subsidies. Under the agreement, Argentina will gradually reduce its fiscal deficit to 0.9% of GDP by 2024 and terminate a long history of debt monetization. 

Argentine markets will strengthen in the short term. Bond prices popped by three cents in the wake of the agreement’s announcement. The accord between the two historically contentious actors gives Argentina some fiscal breathing room. 

Still, the success of the agreement, which will likely see approval from Argentina’s Congress and the IMF’s board soon, depends on its implementation. With Congress dominated by fiscal conservatives for the next year and a half, the 2023 elections will indicate the likelihood of Argentina’s compliance. A strong showing by the center-right Juntos por el Cambio or moderate Peronist factions would ossify confidence in Buenos Aires’ compliance.