By Nicolás Misculin
BUENOS AIRES (Reuters) -Argentina’s lower house on Wednesday gave its stamp of approval for the government to kick off talks with the International Monetary Fund (IMF), a key hurdle for the program the country needs to get its finances in order.
The lower Chamber of Deputies, in a divided vote, passed a decree issued by President Javier Milei’s government earlier this month that supported a new IMF program.
Congress could have blocked the decree if both chambers voted against it.
Argentina, which is battling with negative net foreign currency reserves after years of over-spending, currency crises and regular defaults, is the IMF’s biggest borrower with 22 loan programs to date. It is still repaying a 2022 $44 billion deal.
The government says a new deal is needed to bolster the central bank’s accounts and allow the country to move towards undoing capital controls that have been in place since 2019 and that it says stymie business and investment.
Milei’s libertarian party has only a small minority in Congress, but he has pushed through some of his agenda by winning over conservative and moderate allies.
Milei, flanked by his sister – a close adviser and political ally – and Economy Minister Luis Caputo, cheered the measure’s passing in a photo uploaded to social media.
Markets applauded the move as well, with the local index up 4.5% at close and over-the-counter bonds climbing in after-hours trading.
The vote was split, with 129 lawmakers in favor, 108 against and with six abstaining.
“I support this, though with a critical eye,” moderate Peronist opposition lawmaker Miguel Pichetto told reporters before the vote.
Milei had angered some lawmakers by pushing the deal via a presidential decree rather than through a regular bill in Congress.
“I have a critical view of the (decree),” Pichetto added. “I think it lacks explanations… but I think we need to think primarily about Argentina.”
Milei, a political outsider who won a shock election in 2023, pledging to end years of economic crisis in Argentina, has lowered inflation and overturned a deep fiscal deficit, but now faces the challenge of reviving growth and rebuilding state coffers.
His tough austerity and spending cuts have also increased poverty rates and triggered protests against his government, especially by hard-hit pensioners. A larger-than-usual crowd was expected to turn out in front of Congress on Wednesday after a regular retirees’ protest turned violent last week.
(Reporting by Nicolás MisculinEditing by Lucila Sigal, Frances Kerry and Alistair Bell)
