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LatinNews Daily - 26 January 2022

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ARGENTINA: Fernández calls extraordinary session of congress

On 25 January the Argentine government led by President Alberto Fernández convened an extraordinary session of the national congress, which is to sit from 1 to 28 February to consider a total of 18 legislative initiatives.

Analysis:

Perhaps most newsworthy about the recall of congress is what was not mentioned: the country’s negotiations with the International Monetary Fund (IMF) to reschedule debts and agree a new economic plan. The implicit deadline for an agreement with the IMF, which will need to be ratified by congress, is the second half of March when heavy capital repayments fall due, potentially pushing the country into default. Not including the IMF agreement among the 18 bills under discussion is seen by some as a negotiating tactic, a sign that the two sides remain far apart, and that government wants to extract concessions from the IMF before putting the agreement on the congressional agenda.

  • The 18 bills for discussion include reforming the council of magistrates, the key body which appoints and removes judges. Its current composition has been ruled unconstitutional by the supreme court which gave the government until April to secure congressional approval for an alternative.
  • At issue is the balance between political and non-political appointees. Discussions on the composition of the council of magistrates are likely to be tense, especially with the centre-right opposition Juntos por el Cambio (JxC) having greater clout after November’s mid-term elections.
  • The thorny IMF issue remains the top political priority. The government has not scheduled any congressional time to discuss an agreement. Nor has President Fernández made good on his promise, made last November, to present a multi-year economic plan for discussion with the congressional opposition. However, if a breakthrough is reached in the IMF talks, it is most likely that the congressional agenda will be rapidly re-written to allow it to be discussed.

Looking Ahead: Financial markets are focusing on US$1.1bn worth of Argentine capital repayments due to the IMF which fall due on 28-31 January, for a sign of progress. Foreign currency reserves remain low, increasing pressure for a deal.