IMF approves disbursement of US$2 billion for Argentina

The executive board of the International Monetary Fund (IMF) approved on Thursday the first review of the loan granted in April to Argentina, which enables the disbursement of some US$ two billion, as reported by the financial institution.

In April, chronically indebted Argentina agreed with the IMF a four-year loan within the framework of the Fund’s Amplified Service to the tune of US$ 20 billion, out of which it already received US$ 12 billion.

The executive board “completed the first review” of the agreement and will disburse “approximately US$ 2 billion” more, as stated by the IMF in a press release.

“This marks an important milestone under the programme” aimed at strengthening public finances, reducing inflation, rebuilding reserves and laying the foundations for a more solid growth led by the private sector, according to the Fund.

The IMF applauds the administration of ultraliberal President Javier Milei, which has reduced inflation (from 211 percent in 2023 to 118 percent last year) and achieved a fiscal surplus in 2024 for the first time since 2010.

Milei boasts that the achievement was due to closing bodies, eliminating 50,000 officials and nearly eradicating public works.

“The news stage of Argentina’s stabilisation programme (...) has had a strong start, despite a challenging external environment,” stated IMF director Kristalina Georgieva in the press release.

Restrictive macroeconomic policies “have facilitated a smooth transition towards a more flexible currency exchange system and the easing of most restrictions and currency exchange controls” and the country has once again accessed international markets “ahead of schedule”, she added.

Georgieva highlighted that “deflation has been resumed, the economy has continued to expand, and poverty has been reduced even further.”

Yet the IMF acknowledged that the reserves goals have not been met, the Achilles heel of the Argentine government.

“Even though the quantitative goal of mid-June for accumulation of net international reserves (NIR) was lost, other criteria were met (...) and corrective measures have been implemented to approach the goals, the Fund stated, however.

Georgieva asked to preserve “the flexibility of the exchange rate” and to strive to “rebuild reserve buffers” because “it is essential to enable Argentina to manage crashes better and access in a lasting manner the international capital markets in more favourable terms”.

Buenos Aires is satisfied.

The first review “is important because there is one thing which will not go unnoticed in the market”: it changes the reserve accumulation schedule to a “much more compatible one with the macro evolution,” said Argentine Economy minister Luis Caputo on streaming channel Carajo. 

Georgieva advised the country to promote formal employment, drive direct foreign investment and strengthen trade openness.

TIMES/AFP