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Argentina: Congress Passes New Law Requiring Congressional Approval for Public Debt

(Mar. 11, 2021) On March 3, 2021, Argentina’s Congress passed Law 27612 on Public Debt Sustainability, which provides that financing agreements with any international organization must be approved by law.

The General Budget Law of the National Administration for each fiscal year is now required to provide a maximum percentage amount assigned to the issuance of public securities in foreign currency and under foreign legislation and jurisdiction with respect to the total amount of debt authorized for each fiscal year.

Any issuance of public securities of debt that exceeds the maximum stipulated in the General Budget Law for the corresponding fiscal year will require a special law of Congress that expressly authorizes it.

In addition, any financing plan or public credit and loan operations carried out with the International Monetary Fund (IMF), as well as any increase in the amounts of those plans or operations will require approval by law.

Supporters of the new law consider the initiative a powerful safeguard to ensure the sustainability of public debt. At the same time, the new law reinforces the power and functions of Congress under article 75 of the National Constitution, which assigns Congress a central role in debt issues.

According to the minister of economy, the law aims at establishing as a state policy the strengthening of institutional mechanisms that guarantee the sustainability of the public debt and the execution of macroeconomic stabilization plans for the long term, beyond one government or administration term.

The government considers that the new law will allow greater transparency in the criteria on which foreign debt policies are based and build conditions for the country to achieve medium- and long-term stability.