By Agustin Geist and Nicolás Misculin

BUENOS AIRES, Reuters – Argentina reached a $44.5 billion standby deal with the International Monetary Fund (IMF), a government statement said Friday. This is a significant breakthrough after long and tense talks about restructuring loans that the country can’t repay.

For more than a year, the South American nation has been in negotiations with the IMF about a program to restructure debt from 2018’s failed loan agreement of $57 billion. This was the largest IMF ever. Due Friday, $700 Million was due.

President Alberto Fernandez addressed the nation in Buenos Aires. He said that this agreement could order the future and make it better. Fernandez also stated that Argentina would continue to spend its money as planned.

We had an insurmountable debt that left us with no future and no present. “Now we have an acceptable agreement, which will allow us grow and satisfy our obligations via our growth.”

However, the IMF has not yet commented on this agreement.

The recent uncertainty surrounding a deal in Argentina has caused a severe downturn in Argentina’s sovereign debt. Meanwhile, anti-IMF sentiment has increased within the country that produces grain. Some protestors called for the government on Thursday to stop paying its repayments.

After the news, the stock index and bonds of the country jumped all day on Friday.

Martin Guzman from Argentina, the Economy Minister, stated that Argentina would reduce its fiscal deficit to 0.9% in 2024 under the terms of the deal and will gradually eliminate central bank funding to the Treasury.

Guzman explained that he hopes to meet his deficit goals with real spending. This will not stop economic recovery. He also said that he hopes to slowly increase tax collections.

Although he ruled out an immediate exchange rate decline, he stated that his country would pursue positive real rates of interest and lower rampant inflation which currently stands at more than 50% annually, hurting both savings and salaries.

Argentina and IMF have been at war over Argentina’s ability to reduce its deficit.

Capital Economics’ Latin America economist Nikhil Sanghani said the agreement, after many months of hardball tactics, would provide “some relief for international bondholders in a near term”, although there were still many outstanding issues.

He stated that “this is only the beginning of a long road to rectify Argentina’s macroeconomic imbalances.” (Graphic: Argentina’s USD bond prices continue falling, https://graphics.reuters.com/ARGENTINA-ECONOMY/DEBT/zgpomaegjpd/chart.png)