Argentina: bid in the ruling party threatens agreement with the IMF

BUENOS AIRES (AP) — The principle agreement reached by the government of Alberto Fernández with the International Monetary Fund to refinance a debt of 44.5 billion dollars could founder, but not because of the opposition but because of the internal dispute within the ruling party.

The negotiation with the credit organization exposed once again the tension in the ruling Frente de Todos between the more moderate wing that supports President Fernández and the center-left current led by his vice president and former president Cristina Fernández de Kirchner (2007-2015), whose differences came to light after the defeat in the 2021 midterm elections.

On the first business day after the official announcement of an agreement in principle with the IMF, the national deputy and son of the vice president, Máximo Kirchner, resigned from the presidency of the block of pro-government deputies in Congress in rejection of the pact with the organization.

In addition to his relationship with the vice president, Kirchner played a key role in the parliamentary negotiations to approve the projects sent by the Executive Branch to Parliament and is also the leader of the youth group La Cámpora, many of whose members hold strategic positions in the government.

“This decision stems from not sharing the strategy used and much less the results obtained in the negotiation with the International Monetary Fund (IMF), carried out exclusively by the economic cabinet and the negotiating group that responds and has the absolute confidence of the President of the Nation, to whom I never stopped telling my vision so as not to reach this result,” Kirchner said in a public letter.

The Argentine government announced on Friday a principle of agreement with the agency to refinance the maturities of the next two years of the loan contracted in 2018, then governed by the conservative Mauricio Macri.

The original credit was greater than 55,000 million dollars, the largest in the history of the IMF, but 44,500 million dollars were drawn, of which the majority was used to pay debt and control the exchange market.

Vice President Fernández de Kirchner, who has been very critical of the IMF, has not yet ruled on the principle of agreement, although it is inevitable to assume that she shares her son’s vision.

To enter into force, the agreement must be approved by Congress, hence the impact caused by Kirchner’s resignation by questioning whether the Front of All (FdT) will be able to muster the necessary votes to achieve it.

“This deals a significant blow to the deal, especially as many of the most challenging issues still needed to be negotiated,” warned economic analyst Daniel Kerner, managing director for Latin America at consultancy Eurasia Group. “Congress must approve the deal and a divided ruling party will have a hard time finding votes.”

On the other hand, “it would not be easy for the opposition to support an agreement that part of the ruling FdT rejects,” he added.

In line with the analyst’s opinion, deputy Leopoldo Moreau -who belongs to the current led by the vice president- warned on Tuesday that in the parliamentary debate “we are going to draw attention to the dangers and risks of the agreement and hopefully it will serve to when the memorandums of understanding are signed some issues will be removed. If not, we will be in a complex situation.”

President Fernández defined the debt as “a sword of Damocles”, but considered that a default would have led the country into a scenario of chaos. He stressed that the agreement will not imply an adjustment that affects, among others, subsidies to the most unprotected sectors in a country where poverty exceeds 40%. However, the IMF will audit the progress of the agreement every three months, which from Kirchnerism is seen as interference in the government’s economic policy.

“It seems to me that one thing is the internal discussion of a space and another the issues in which the country is at stake,” said Sergio Massa, the president of the Chamber of Deputies, after a meeting with the president to define the new leader from the ruling bloc: Germán Martínez, deputy for the province of Santa Fe, who was not among the candidates for the post.

To add more uncertainty to the political and economic scenario, social and political organizations linked to Kirchnerism marched on Tuesday against the Supreme Court and for the “democratization of justice.”

“Today there are hundreds of thousands of Argentine men and women throughout the country coming together to make visible that there was a large part of the Judiciary that during the Macri government…was a silent or active part of the use of the State to build cases” against opposition leaders former vice president Amado Boudou (2011-2015), who served time for corruption and attended the protest, told The Associated Press.

“This will be repeated many times until the people manage to change this situation that violates democracy, the Republic and ultimately violates the functioning of the entire society,” said Boudou, who like other former Kirchner officials who faced court cases proclaims victim of “lawfare”, that is, of the use of justice for political purposes.

“It is an act of great institutional gravity and another step in the systematic policy that the ruling party has assumed to attack judges who do not behave according to their wishes,” said Together for Change, the main opposition force, referring to the legal cases faced by the vice president and several of her relatives. “Not only is it going against what the constitution establishes, but it is simply a coup attitude, as it would be to seek the resignation of the president or a member of Congress outside the mechanisms established by the constitution” .

President Fernández described the call as “citizen expression” and warned the judges that “they would have to pay attention and correct what needs to be corrected.”

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