Argentina-IMF debt deal hangs in the balance
Monday, January 24, 2022
Significance
Opposition leaders suspended a meeting with Economy Minister Martin Guzman, while Foreign Minister Santiago Cafiero’s visit to US Secretary of State Antony Blinken elicited support for a deal but only one based on a “solid economic programme”. A new deal is needed by end-March to avoid a new default with the IMF.
Impacts
- A new financial crisis would drive inflation still higher, worsening a fragile social context and raising labour conflicts.
- A new IMF deal appears more likely than not, but will serve largely as a bridge until a new government takes office in 2023.
- A deal that fails to boost investor confidence will keep existing policy distortions such as foreign exchange controls in place.
- The IMF demands wide political buy-in for any deal, but the opposition will withhold support absent the vice-president’s explicit backing.