Argentina’s Congress has begun debating and will likely vote on a proposed new agreement between the South American country and the International Monetary Fund (IMF), a critical step toward the program required to get the country’s finances in line.
The lower Chamber of Deputies on Wednesday began debating a decree issued by President Javier Milet’s cabinet earlier this month that approved a new IMF program.
If both chambers vote against the decree, Congress has the authority to block it.
The country, which is dealing with negative net foreign currency reserves as a result of years of overspending, currency crises, and frequent defaults, is the IMF’s largest borrower, with 22 loan programs to date. It is still making payments on a $44 billion transaction signed in 2022.
The government says a new deal is needed to help bolster the central bank’s accounts and allow the country to move towards undoing capital controls that have been in place since 2019 and that it says stymie business and investment.
Milei’s libertarian party has only a small minority in Congress, but he has pushed through some of his agenda by winning over conservative and moderate allies. The party is confident it will get enough support for the IMF decree
Milei, a political outsider who won a shock election in 2023 promising to end Argentina’s economic catastrophe, has reduced inflation and eliminated a massive fiscal deficit, but now confronts the problem of restarting economy and rebuilding public finances.
Milei’s ability to gain legislative backing will be put to the test with the IMF arrangement.
His harsh austerity and budget cuts have increased poverty rates and sparked protests against his government, particularly among hard-hit elderly.
