Lula government supports loan for Argentina to pay debt with the IMF

The Brazilian government voted in favor of a loan request from Argentina worth almost 1 billion dollars (R$4.75 billion) to the Corporación Andina de Fomento (CAF), the development bank for Latin America and the Caribbean. The loan will be used by the government of libertarian Javier Milei to pay off part of the country’s debt with the International Monetary Fund (IMF). An amount of R$4.5 billion must be paid by Argentina to the entity by next Thursday (21).

The loan was being created with the support of the Brazilian government while former Argentine president Alberto Fernandéz, an ally of Lula, was president of the country. There was an expectation that Brazil, under Lula’s leadership, would go back after Milei’s election. However, an eventual denial by the Brazilian government of the request could be quite damaging to relations between the two countries, as all other nations that make up CAF voted in favor of the loan.

The Argentine country’s debt to the IMF already exceeds US$44 billion. Argentina is experiencing a very dramatic period in its economic history, with more than 40% of its population living in poverty. The country is dealing with a broad devaluation of the peso, the local currency, and uncontrolled inflation – according to figures released by the Argentine Statistics Institute in November, the price increase in the last 12 months was 142.7%.

The economic chaos is the result of decades of populist Peronist administrations that increased public spending in an unsustainable way. During his campaign, Milei promised to implement strong control over public accounts and bet on the dollarization of the Argentine economy and the end of the Central Bank.

This Saturday (16), minister Fernando Haddad commented on Brazil’s vote in favor of the loan and recalled the intrigues of the PT president and the new president of Argentina, who during the electoral period exchanged insults. “Brazil voted in favor of Argentina to obtain a loan to overcome its crisis and everyone knows that the current president of Argentina offended President Lula during the campaign, but that doesn’t mean Brazil stopped supporting the Argentine people,” he said. he.