IMF approves about US$1-billion disbursement for Argentina in fresh win for Milei

The International Monetary Fund’s executive board approved Argentina’s latest programme review to unlock about US$1 billion, a vote of confidence in President Javier Milei despite missing a key programme target.

The board approved the funds after IMF staff finished the second review of Argentina’s US$20-billion debt deal, the Washington-based lender said in a statement Thursday. The approval brings total disbursements under the programme, known as an Extended Fund Facility, to about US$15.8 billion. 

“Reform momentum has strengthened with approval of key fiscal, trade and labour legislation and refinements to the monetary and FX framework, contributing to a build-up in reserve buffers and improving Argentina’s capacity to manage shocks,” according to the statement.

Argentina refrained from purchasing foreign reserves until this year as Milei has sought to keep inflation at bay. The Central Bank has since purchased more than US$8 billion in hard currency. But the government has yet to tap international debt markets, which means dollars purchases have flowed out to meet mounting foreign currency debt obligations.

IMF directors described the program’s performance as “mixed until end-2025” due in part to delays on rebuilding external buffers. They have also acknowledged improvement in reserves after missing the net-reserves accumulation target in December, and added that Argentina should move toward securing “timely and durable” access to international markets.

“Directors welcomed the Central Bank’s FX purchase programme and called for a sustained implementation, combined with continued exchange rate flexibility,” the statement added.

Milei opted against issuing debt earlier this year because he deemed interest rates too high, only to see them rise further on the Iran war. The country was recently upgraded to B- by Fitch Ratings, a move that could further compress interest rates if echoed by peer agencies.

Argentina faces more than US$30 billion in total debt obligations in 2027, according to JPMorgan Chase & Co. Next year’s presidential elections, which in the past have strained reserves as Argentines hedge electoral volatility by purchasing dollars, are likely to add headwinds.