Argentina and IMF reach preliminary agreement on refinance of $45 billion Macri-era debt

Argentine President Alberto Fernández announced that Argentina and International Monetary Fund (IMF) staff have reached a preliminary agreement to refinance $45 billion in debt borrowed during the right-wing Mauricio Macri administration in 2018-19.

The country will meet a $731 million payment due this week - but the IMF will reimburse, after signing, some $4.3 billion in principal paid so far by Argentina in order to strengthen nearly-depleted net Central Bank reserves.

Argentine Economy Minister Martín Guzmán, who has led negotiations with the IMF since President Alberto Fernández took office two years ago, obtained his request that IMF disbursements exceed scheduled repayments.

Payments to the IMF will thus be covered until September of next year by the IMF itself.

The program will likewise not require austerity for the next two years - though Guzmán agreed to gradually reduce "primary" fiscal deficits (i.e. excluding debt service) from 3% of GDP in 2021 to 0% by 2025, while maintaining critical current account surpluses.

And unlike past IMF programs, the agreement envisages no labor law deregulation, state layoffs, or changes to public pensions.

The agreement, however, needs ratification by both the IMF board and Argentina's Congress to take effect - a tall order given that Fernández's right-wing opposition, which sees political benefit from a default, has vowed to oppose any agreement.

A drubbing in the 2021 mid-terms left Fernández's center-left Front for All with razor-thin majorities in both houses.

Argentina had earlier refinanced $66 billion in privately-held foreign debt - around a third of the total.

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IMF Managing Director Kristalina Georgieva and Argentine President Alberto Fernández during their first in-person meeting in Rome last May.

Today's historic agreement, if ratified, would avert Argentina's default on a record, $45 billion IMF bailout granted to former right-wing President Mauricio Macri during his failed, 2019 re-election bid.

The bailout was reportedly granted at former President Donald Trump's behest - over the IMF board's objections - during Christine Lagarde's tenure.