Economy Minister Luis Caputo said Monday that Argentina is seeking a “high” amount of funds up front from the nation’s new financing agreement with the International Monetary Fund.
Caputo, 59, revealed last week that Argentina is seeking around US$20 million in fresh financing from the multilateral lender on top of its existing US$44-billion debt with the IMF.
The two sides are in negotiations over the deal, which still needs approval from the IMF’s executive board.
Reports suggest Argentina is seeking at least 40 percent up front.
“In general they do 20 percent, 30 percent, 40 percent [of the total agreement]. We have asked for more because in a traditional agreement what the Fund does is to make partial disbursements in exchange for meeting fiscal and monetary targets – something that, in our case, we have already done,” Caputo said in an interview on Sunday Night with the LN+ news channel.
IMF managing director Kristalina Georgieva commented hours later that Argentina's request for an initial 40-percent disbursement “is reasonable.”
“They have earned it, given their performance,” she said at an event organised by Reuters.
President Javier Milei’s government, thanks to unprecedented cuts in public spending, achieved Argentina’s first annual surplus of the accounts in 14 years in 2024. The economy contracted by 1.8 percent, less than anticipated, over the same period.
Caputo said last week that Argentina would use fresh funds from the IMF to strengthen the Central Bank's reserves, which have been drained of US$1.78 billion over the past two weeks amid a run on the peso.
Argentina urgently needs to bolster Central Bank reserves, which closed Monday at just US$25.052 billion. On Monday, it sold US$143 million to control the currency.
“The first instalment of the disbursement is very important for us because the Central Bank is very undercapitalised,” Caputo admitted.
The IMF confirmed last week that the negotiations “are very advanced,” clarifying that new disbursements will be in stages, without providing figures or deadlines.
The programme will be in addition to the one Argentina signed with the IMF in 2018 for US$44 billion.
Caputo said last week that he is also negotiating loans with the World Bank and the Inter-American Development Bank, as well as the CAF regional development bank.
The minister admitted that there is “uncertainty” over the final details of the IMF deal and that this is encouraging volatility in the foreign exchange market.
“There will always be volatility [but] there is no possibility of economic shocks” here, because “the macroeconomy is in order,” he argued.
Argentines, accustomed to recurrent economic crises and devaluations, use the US dollar as a safe haven for protecting savings.
Sharp movements in the exchange rate usually have a correlation on domestic prices, which therefore have a direct impact on inflation.
Lowering inflation has been Milei’s main economic achievement since taking office in December 2023.
Inflation fell from 211 percent in 2023 to 118 percent in 2024, albeit at the cost of falling investment, mass public sector lay-offs and a collapse in consumption.
Milei faces key legislative elections in October.
– TIMES/AFP/NA
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