On 11 December thousands of students, community activists, and trade unionists led a demonstration in Buenos Aires against what they described as an imminent economic stabilisation agreement between Argentina and the International Monetary Fund (IMF).
Analysis:
The protest was mainly organised by left-wing organisations, such as the Movimiento Socialista de los Trabajadores (MST), which between them lack sufficient congressional representation to block an IMF agreement. But it highlighted the growing tension within the ruling centre left Frente de Todos (FdT) coalition over the political repercussions of an IMF deal. Analysts believe a damaging split between supporters of President Alberto Fernández and Vice-President Cristina Fernández cannot be ruled out.
- On 10 December the IMF said there had been “progress” in the latest round of technical talks in Washington with an Argentine negotiating team, discussing the rescheduling of nearly US$44bn worth of debt and an associated economic stabilisation programme.
- On the same day both President Fernández and his vice president appeared together for the first time in three weeks at a rally to mark the second anniversary of the former’s term in office.
- Vice President Fernández criticised the IMF for supporting “failed economic models” and insisted there should be no heavy fiscal austerity, known as an ‘ajuste’. The president, seeking to defend the deal, reassured her that “the only plan that will be approved will be one that allows continuing economic recovery”.
- Ultimately opinions will differ over the degree of austerity that is acceptable. While agreeing on the need for growth, IMF officials have said the agreement has to include narrowing the fiscal deficit, controlling money supply, boosting dollar reserves, and reducing inflation.
- The government is clearly struggling to achieve a consensus within the ruling coalition, with economy minister Martín Guzmán trying to reconcile the requirements of Vice-President Fernández with those of IMF managing director Kristalina Georgieva.
Looking Ahead: Immediately after the November md-term elections – in which the FdT coalition lost its majority in the senate, President Fernández promised to submit a multi-year economic programme to congress, which, it was understood, would mirror the IMF stabilisation agreement. The fact that it has still not appeared suggests domestic political consensus remains elusive, and the government is beginning to run out of time. To avoid default, an IMF programme needs to be finalised and ratified by congress by March.