​A step towards financial consolidation

ARGENTINA - In Brief 11 Mar 2022 by Esteban Fernández Medrano

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As anticipated in our last report, with 202 votes in favor, 37 against, 13 abstentions, and 4 absentees, the Chamber of Deputies gave, at the early hours of today and after a 13-hour-long debate, a half sanction to the law that approves the financing of the recently negotiated Extended Fund Facility (EFF) with the IMF. With this relatively ample approval, the bill now moves to the Senate, where its treatment is expected to start in the commissions on Monday afternoon. The government intends to send the bill to the Senate to approve it, ideally later next week.Considering the influence of the provincial governors in the Senate, which due to their executive responsibilities tend to have a more pragmatic stance (more "Realpolitik") to the IMF negotiations, our base case scenario remains that the bill will be approved, despite the expected rejection of Vice President Cristina Fernández de Kirchner (CFK), who is the president of the Senate. In the Lower House, the government finally managed the opposition support, when the bill was modified to clarify that the congressional approval regarding the EFF is limited to the sources of public financing but does not express an implicit legislative approval of the underlying economic measures expressed in the program (such as potential tax hikes, etc). More specifically, the bill´s main articles were again summarized in one, stating: “Approval, … (of) the public credit operations contained in the ’Extended Facilities Program’ to be held between the National Executive Power and the International Monetary Fund (IMF) for the cancellation of the ‘Stand-by Agreement’ agreement duly entered into in 2018 and for budgetary support. The Exec...