More than two years after coming to power in December 2019, with the burden of restructuring debt with the International Monetary Fund (IMF), Argentinian President Alberto Fernandez (center left) showed relief on Friday 28 January. “We had a rope around our necks, a sword of Damocles. We now have a path that opens before us”, he defended, when announcing an agreement in principle relating to the renegotiation of a loan of around 45 billion dollars (more than 39 billion euros) contracted in 2018 by the previous government by Mauricio Macri (center right).
It is “a possible and reasonable solution”, argued the president. Without this agreement, the country would have been faced with unsustainable repayments, of more than 19 billion dollars in 2022, as much in 2023, and nearly 4 billion in 2024. They will therefore be rescheduled. The Minister of Economy, Martin Guzman, detailed the main lines of these “really difficult negotiations”. They are based in particular on controlling the public deficit, which is expected to decrease gradually, from 3% of gross domestic product (GDP) in 2021 to 2.5% in 2022, 1.9% in 2023 then 0.9% in 2024.
The levers of this turn of the screw? No austerity measures, assured the leader. “All the rights of our retirees will be preserved”, he says, and “no labor law reform” nor of “privatization of public enterprises” do not point to the horizon, in order, among other things, not to disturb recovery. GDP jumped by 10.8% in the first three quarters of 2021, after three years of recession.
No devaluation in sight
Without giving any numerical references to inflation, an endemic disease of Argentina (nearly 51% in 2021), the minister announced a reduction in the monetary issue and rejected any devaluative policy. “The announcement of a compromise and the payment of the deadline is positive news that relieves tension and helps reduce uncertainty”, assesses the Argentine private firm ABECEB, in a nuanced note published on January 28.
If the objective of reducing the public deficit in 2022 seems realistic, the firm judges that of 2023 “more dubious, given that it is an election year”, with a presidential election in October. “We will have to devalue further, and beyond inflation, to regain competitiveness”, continues the firm, which remains “cautious, awaiting clarification”.
Remain to be specified, in particular, the new schedule of payments, the possible objectives of inflation, or the contours of the monetary policy. This is a ” Wrong “ pre-agreement, analysis Andrés Asiain, economist and director of the Center for Economic and Social Studies Scalabrini Ortiz: “It does not solve the debt issue in the medium and long term, and does not bring short-term stability to the economy or to the current government. »
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