Argentina and the International Monetary Fund have reached an agreement in principle on a new $44.5 billion standby plan, both parties announced on Friday, marking a big step forward in difficult talks to restructure loans the country cannot repay.
The South American country has been in talks with the IMF for more than a year about a new program to restructure debt left over from a failed $57 billion loan arrangement in 2018, the fund’s largest ever. A $700 million payment was due on Friday.
“We had an unpayable debt, which left us without a present and a future. Now we have a reasonable agreement that will allow us to grow and meet our obligations through growth,” President Alberto Fernandez said in an address to the nation.
He said the agreement would not limit Argentina’s economic plans or spending, which had been something of a red line for a country emerging from years of recession and the harsh impact of the COVID-19 pandemic.
In a statement, the IMF claimed that its staff had reached a “understanding” with the government on key measures that would underlie the final agreement, including the road toward fiscal consolidation, which had been a major sticking point in the negotiations.
“IMF staff and the Argentine authorities have reached an understanding on key policies as part of their ongoing discussions of an IMF-supported program,” Luis Cubeddu, mission chief for Argentina, said in a statement.