According to the European Union’s foreign policy representative, Josep Borrell, Argentina is getting ready to sign a free trade agreement with the European Union. However, its new president, Javier Milei, describes it as being “useless” for any purpose.
During an event in Lisbon on Wednesday, Borrell stated:
According to Reuters, “nowadays Argentina seems to be more ready to reach an agreement.”
Trade experts say that time is running out to reach an agreement between the European Union and Mercosur, and that its ratification by the European Parliament will face the obstacle of the general elections next year in Europe.
The negotiation of this deal took place for the first time in 2019, however, it was postponed because of the European demands for environmental guarantees.
The agreement will allow Argentine products such as meat and grains to enter European markets, while also granting access for European products like cars and machinery to the Argentine markets.
However, it remains uncertain whether Argentina will be able to overcome the opposition of some member countries of “Mercosur”, such as Brazil, before the end of the ratification period established by the end of 2025.
An agreement with the IMF is approaching
On Tuesday, three informed sources told Reuters that Argentina and the International Monetary Fund are close to reaching an agreement on the review of their $44 billion loan program, which is a significant step that will put the country on the right track to repay the next installment of the loans.
Government officials and representatives of employees of the International Monetary Fund are currently engaged in negotiations regarding the seventh review of the 2022 loan. Originally, the review was expected to be completed in November, but it was postponed due to the change in government when Javier Mayli assumed his position on December 10.
A witness who preferred to remain anonymous due to the confidentiality of the conversations stated:
“The agreement is close and the country is working to obtain approval this month.”
A spokesperson from the International Monetary Fund stated that agency employees will travel to Buenos Aires on Thursday to continue negotiations regarding the seventh review, and additionally mentioned that Argentina will receive the outstanding capital payments in January as a lump sum at the end of the month.
As agreed, Argentina is obligated to make a payment of approximately two billion dollars to the International Monetary Fund this month.
The seventh review, which assesses the program’s performance standards up until September, is crucial to getting the agreement back on track, as it veered off course shortly after its last official evaluation in August due to the failure to achieve objectives.
If it is approved by experts from the International Monetary Fund and by the Fund’s Executive Board, the review will also pave the way for the release of approximately $3.3 billion.
The administration of Miley Argentina has already submitted an official request to exempt the program, following the previous administration’s failure to meet the agreed objectives in August.
One of the three sources cited:
“The key lies in the fact that recent prior actions taken by the country may enable the exclusion from the program.”
The International Monetary Fund usually agrees to waivers of quantitative performance criteria that were not met if it believes that the program will remain successful, according to the Fund’s guidelines.
Argentina has to pay $2.8 billion to the International Monetary Fund in January and February. The latest IMF loan was secured through a short-term financing bridge of $960 million from the Latin American and Caribbean Development Bank, as the country’s net reserves have fallen into the red zone.
The bank “Wall Street Morgan Stanley” expects the complete program of the International Monetary Fund to be renewed for the country during the second half of the year, according to a report published on Tuesday.
