​First impressions on the announced EFF structure

ARGENTINA - In Brief 28 Jan 2022 by Esteban Fernández Medrano

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The government confirmed in two separate presentations that Argentina had reached an agreement with the IMF. First, in a recorded speech, President Alberto Fernández gave a primarily political message, which seemed directed at reassuring his Kirchnerist allies. In a follow-up press conference, headed by the Chief of Cabinet Manzur and the Economic Minister Guzman, they gave a more technical review of the agreement. Martín Guzman clarified that the agreement was finally achieved thanks to both negotiating sides' making compromises regarding the economic objectives of the program, particularly regarding the fiscal deficit, which was the main bottleneck to closing a deal. With this obstacle out of the way, the government and the staff will be drafting in the coming days, the required formal documents to sign a new Extended Fund Facilities (the Letter of Intent and the Technical Memorandum of Understanding). In the meantime, the government honored yesterday´s payment and will continue doing so next week. For its formal approval, on the IMF side, this agreement would need to be presented to the Board of Directors. Locally, President Alberto Fernandez reaffirmed that this agreement will be presented to Congress. Despite the opposition´s rather mistrusting stand towards official propositions, and Máximo Kirchner’s fumble during the 2022 budget approval, we expect that JxC will support the new EFF in Congress. After all, it has been their administration that asked for the IMF loan that is now being “refinanced”. Similarly, we see no reasons why the IMF Board should not approve the draft revised by its technical staff. While the fine print of the agreement has not yet been rele...