By Jorgelina do Rosario and Rodrigo Campos

LONDON/NEW YORK – Friday’s approval by the International Monetary Fund of a $45 billion agreement with Argentina, according to three people with direct knowledge. This move removes the last hurdle in resolving the debt issue with Washington-based lender.

Two sources say that the agreement reached was unanimous and follows more than one year of negotiations. This replaces the failed program worth $57 billion from 2018, which Argentina owes more than $40 billion.

The spokesperson of the IMF did not immediately respond to our request for comment.

Core demands are to lower the fiscal deficit and increase interest rates. The deal doesn’t include labor or pension reforms.

After Argentina’s Congress approved the funding aspect of the staff-level agreement on March 17, but not the policies that will keep the economy on its feet and make the debt manageable, the approval was granted.

Over the agreement, political cracks within Argentina’s center-left government coalition were widened. Additionally, there are concerns that economic strings may further stress people living in South American countries with higher inflation than 50%.

However, it is possible to miss your targets. JPMorgan (NYSE) revised this week its forecast of the primary fiscal deficit for 2022 at 2.8% of GDP. That’s higher than JPMorgan’s 2.5% target.

Alejo Czerwonko (emerging markets Americas CIO, UBS Global Wealth Management), stated that it will not trigger the positive sentiment shock, an increase in private investments, or access to the international capital markets the country so desperately needs. This was before Fridya’s meeting.

The Fund runs the risk of reputational harm if it fails to succeed. Argentina’s 2018 IMF agreement was its largest to date.

Some of the private holders of Argentina’s debt were criticized for their involvement in negotiations that ended in September 2020. They claimed the process was contaminated with politics and allowed the government’s “erratic” economic policies to be pursued.

“There’s been a lot of criticism of this deal, that it’s going to fall apart, that it’s an IMF-light deal, it’s a Band-Aid… But it’s an important Band-Aid,” said Robert Koenigsberger, chief investment officer at Gramercy, in an interview before Friday’s meeting.

The only thing that could make this stuff less valuable than 32 cents, which is the current price of the stock today is the possibility that the wheels would fall off the bus. This IMF deal is supposed to tighten the lug nuts, as it were.

Restructured U.S. dollars bonds trade in the 30 cents area of the dollar for the majority of last year. They were the last to fall on the day with the 2030 falling 2.6cs to 29.50.

Argentina: IMF payouts https://tmsnrt.rs/3pCpy90

Argentina’s U.S. dollar bond prices (Interactive graphic) https://tmsnrt.rs/3FzHvdH

Argentina: IMF payouts (Interactive graphic) https://tmsnrt.rs/3MqNshG