Argentina's lower house has approved the government's request to initiate negotiations with the International Monetary Fund (IMF), a crucial step for the country's financial stabilization. The Chamber of Deputies passed a resolution earlier this month supporting a new IMF program in a divided vote.
Congress had the power to block the decree if both chambers voted against it. Argentina, the IMF's largest borrower with 22 loan programs to date, continues to repay a $44 billion agreement established in 2022. The government argues that a new deal is essential for strengthening the central bank's finances and ultimately easing capital controls that have hindered business and investment since 2019.
Javier Milei's libertarian party holds a small minority in Congress, but he has managed to advance some of his agenda by securing support from conservative and moderate allies. Flanked by his sister and close adviser, as well as Economy Minister Luis Caputo, Milei celebrated the measure's passage on social media.
The markets responded positively, with the local index climbing 4.5% at close and over-the-counter bonds rising in after-hours trading. The vote concluded with 129 lawmakers in favor, 108 against, and six abstentions.
"I support this, though with a critical eye," said moderate Peronist opposition lawmaker Miguel Pichetto ahead of the vote. He expressed concerns about the approach taken, indicating he believes the decree lacks sufficient explanation. Nonetheless, he emphasized the need to prioritize Argentina's interests.
Milei, a political outsider who upset expectations in the 2023 elections by promising to end the economic crisis, has succeeded in lowering inflation and addressing a significant fiscal deficit. However, he now faces the challenge of revitalizing growth and restoring state finances. His stringent austerity measures and spending cuts have led to rising poverty rates and sparked protests, particularly among vulnerable groups like pensioners. A larger-than-usual crowd was anticipated at Congress following a violent protest the previous week.