The beginning of a new stage: how the IMF agreement impacted the Government’s political plans

Alberto Fernández together with the Minister of Economy, Martín Guzmán

Friday morning Alberto Fernandez he was satisfied with the agreement reached with the IMF. moderately cheerful. Within the national government they understand perfectly that closing the negotiation was important to project an economic plan, but that will not have an immediate impact on the domestic economy.

In other words, what had to be done was done: agree and leave behind the ghosts of a possible default who had been agitated from the Kirchnerist stands in the prelude to the final announcement. Give peace of mind to businessmen and trade unionists who looked askance at the back and forth setbacks between Buenos Aires and Washington.

Although, as they admit inside the Casa Rosada, the verbal and media pyrotechnics may have only been part of an implicit agreement at the top of the Government to tighten the rope a little more before putting the final signature. Let those who are tough play tough at the peak of the agreement. In Peronism they neither confirm nor deny.

Closing the agreement with the IMF is a new break in the management of Alberto Fernández. As was the pandemic at the beginning of his government, the start of the vaccination plan, the defeat in the elections, the post PASO internal political crisis and the decision to gain centrality in Peronism and in his own government. Important milestones that marked Fernández’s two years in power.

The agreement with the Fund will allow the Government to start the year with one of the central issues on the political agenda already resolved
The agreement with the Fund will allow the Government to start the year with one of the central issues on the political agenda already resolved

“We deactivated the last bomb that we had left from the previous management. We agreed with the bondholders, we took measures so that the economy does not collapse after the crisis and the pandemic, and now we have taken this new step”, analyzed a national official very close to the President. They closed the chapter of an inherited history. Argentina will be able to have external financing and that is also good news.

After announcing the agreement with the IMF, the head of state began to receive messages from trade unionists, governors and businessmen congratulating him on the end of the negotiation. That gesture of condescension renewed the air in the Quinta de Olivos, after a few hours of tension marked by the intense pulse of the negotiations with the Fund.

In the environment of Fernández they celebrated the agreement, but they also cut off any attempt to interpret a possible relaunch of the Government from this fact. “There was no atmosphere of celebration, nothing is relaunched. The best agreement that could be made was made and Alberto is satisfied with that achievement”, they pointed out.

What was sought was to impart moderation to the result of the agreement and also to its public presentation. There is no room to celebrate in a country plagued by conflicts and with 40% of poor people. People are interested in not having their electricity cut off, not being killed on the corners of their neighborhoods and that their salary is enough. The Government understood well that triumphalism should not be overacted.

Before and after the announcement, the President was accompanied by his circle of trust. Who are more steeped in their steps in daily management and who have become a mattress to rest on in times of uncertainty, high-impact political decisions or, simply, when the entanglements of political and economic management have to be resolved.

Alberto Fernández together with the presidential secretary, Julio Vitobello
Alberto Fernández together with the presidential secretary, Julio Vitobello

They are the same ones whose priorities on the political agenda are to consolidate a structure that serves the President to be able to build his candidacy in 2023. On that list are the presidential secretary, Julius Vitobello; The chancellor santiago cafiero; and the ministers Gabriel Katopodis and Juan Zabaleta. The four were very close to the head of state in the definition stage.

So was Sergio Massa, who, like Cristina Kirchner, was constantly informed by Guzmán about the progress in the negotiations. In the coalition everyone was informed of the step by step and endorsed each advance that was made. The private is not always the same as the public.

To the officials who were in Olivos, Fernández He made it clear to them that the agreement with the Fund is an important fact, but that the axis of management should not run. People still have the same old problems. The Government needs to show a strong economic recovery this year and a management with fewer fissures and without as much internal noise as the one that took place in the electoral year.

The agreement will give the ruling party greater peace of mind at the beginning of this 2022. Especially after the chaotic end of 2021, without a Budget, with the relationship severed with the opposition and hit by the result at the polls.

This year should not touch the funds item to keep active the 3700 public works that are underway throughout the country. It was one of the achievements of the agreement that is celebrated behind closed doors. The works are the engine of the reactivation and Fernández resisted a reduction in public spending that would complicate the projections in the medium term.

Neither, according to Balcarce 50, will they have a devaluation jump in the short term. The scenario they visualize is positive. The next important step is to reach an agreement with the opposition to vote the law to Strengthen the Sustainability of the Public Debt in Congress.

Sergio Massa will be in charge of negotiating with the opposition so that Congress approves the Public Debt Sustainability Law (NA)
Sergio Massa will be in charge of negotiating with the opposition so that Congress approves the Public Debt Sustainability Law (NA)

The first signs were good. Together for Change, which is the majority opposition bloc, celebrated the agreement with the IMF, but warned that they want to see the details. The small letter. Once they have it, it will be easier to move forward in a negotiation to support the law. Instead, the liberals Jose Luis Espert and Javier Milei They were critical of the deal. Just like the Left. They can be spokes in the wheel in the treatment of the law.

What follows now is the drafting of the memorandum of understanding. The entire economic and fiscal program agreed upon with the IMF will be described there. The drafting will take a few days and will be in charge of the technical teams of the Ministry of Economy and the staff of the Fund.

Once done, the ministry will turn the document over to Congress and the staff will do the same with the body’s directory.For the agreement to be final, the approval of both is needed. That memo will begin writing next week. The details that appear in that document are those that await the opposition to finish taking a position regarding the agreement and the law that they will have to deal with.

“The agreement is a matter of state. It is about the future of Argentina”They assured the government about the agreement reached and how important it is for the Casa Rosada to have achieved it. It is also a message to the opposition. Close to Alberto Fernández they are convinced that this last Friday a “new time” in Argentina and in management. Now they must deepen the economic reactivation. It will be the key to the year that has just begun.


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