Friday, 21 January, 2022

Argentina budget defeat to ‘affect’ debt negotiation

Argentina budget defeat to ‘affect’ debt negotiation

BUENOS AIRES: Argentina’s government suffered an embarrassing defeat on Friday as its 2022 budget was rejected by parliament, with Economy Minister Martin Guzman insisting this would “affect” its debt renegotiations with the International Monetary Fund.

Guzman said the defeat “weakens us as a nation-state within Argentina and before the world. And that hurts us.”

The defeat came just hours before President Alberto Fernandez held a virtual meeting with IMF chief Kristalina Georgieva, reports AFP.

“I spoke with the head of the IMF @KGeorgieva,” said Fernandez on Twitter.

“We both recognized the unexpected problem of the budget rejection but promised to continue working fully focused on bringing about an agreement that does not compromise the continuity of the inclusive economic recovery.”

The proposed budget envisaged 2022 growth of four percent, compared to around 10 percent in 2021, and a relative controlling of inflation at 33 percent, well below this year’s 50 percent.

But it was defeated by 132 to votes to 121 in the lower house Chamber of Deputies, where the governing center-left alliance is in the minority.

It is the first example of the problems that face Fernandez during the final two years of his mandate following last month’s midterm legislative elections defeat.

Having already been in the minority in the Chamber of Deputies, Fernandez’s Frente de Todos (Everyone’s Front) coalition also lost control of the upper house Senate.

Guzman said the rebuttal “signifies rejecting the macro-economic program that is the basis for the negotiations with the IMF to refinance the absurd and damaging $44 billion debt.”

Fernandez’s government has been attempting to renegotiate the terms of the IMF debt—acquired under his liberal predecessor Mauricio Macri—almost since the moment he took office.

At the beginning of the week, Guzman said Argentina can “in no way amortize the repayments of around $18 billion in 2022 and $19 billion in 2023.”

Even so, Georgieva wrote on Twitter that she had a “very good meeting with President @alferdez (Fernandez) on advancing our work to sustain #Argentina’s recovery and address its economic challenges.”