Economy Minister Luis Caputo denied Thursday that the International Monetary Fund (IMF) has demanded Argentina devalue its currency in order to secure a new financing deal.
Speaking during a radio interview, Caputo denied reports that Argentina would have to suffer an inflationary bounce as part of a fresh financing deal with the multilateral lender.
“It is true that there are high prices in dollars [in Argentina], but devaluation is not the solution,” said the minister. “The solution is for them to go down and they will go down with less taxes and more competition.”
President Javier Milei’s government says it is targeting a new loan agreement with the International Monetary Fund within the next two months.
At press time, Milei’s office said in a statement that it would send a decree to Congress to obtain legislative support for a new agreement.
The deal will “imply a public credit operation through which the National Treasury will cancel existing debt with the Central Bank."
The deal, on top of the record US$44-billion loan awarded in 2018, "should be completed in the first four months of the year," Presidential Spokesperson Manuel Adorni told reporters on Wednesday.
“When there are details we will give them to you. If we don't give them to you it is because it [the deal] is not yet closed,” he said.
Reiterating the government’s hopes of a deal in “the first four months” of the year, Caputo said that most of the details of Argentina’s economic programme had already been agreed with IMF officials.
Any delay to the deal would only be a result of a failure to win congressional approval for a new deal or bureaucracy on the part of the multilateral lender, he implied.
Adorni said that any possible agreement would “imply the recapitalisation of the Central Bank” and affirmed that “it would not lead to an increase in debt.”
He added Congress would be consulted about the "viability" of the deal but did not say at what point in the negotiations lawmakers would be given a say.
Cabinet Chief Guillermo Francos warned Thursday that the deal would need congressional approval.
“The possibility of it being approved by decree is not real, because the Fund would not allow it, as legal certainty is required,” said the official in an interview with Radio Rivadavia.
Fresh funds
The IMF and Argentina confirmed in December that they were negotiating a new financing programme. Milei’s government has not said how much it is seeking in new funds.
Argentina’s previous programme, originally worth US$57 billion, was agreed in 2018 by former president Mauricio Macri. It was renegotiated in March 2022 by Milei’s predecessor in office, Alberto Fernández (2019-2023), but relations with the IMF soured and it collapsed at the end of 2024.
A new deal would refinance Argentina's remaining debt from the US$44.5 billion received by the country over the last six years.
Asked to comment on President Javier Milei’s statement in a key speech last week that the government would ask for Congress to back a new deal “in the coming days,” IMF officials remained tight-lipped.
An IMF spokesperson said Thursday that talks were continuing “in a constructive matter,” adding that support from Congress for any future agreement would be welcomed.
“Broad political and social support can improve the implementation of the programme,” said IMF spokeswoman Julie Kozack, though she stressed it wasn’t a condition for the multilateral lender.
“I want to emphasise that ... securing the support of Congress is a decision of the authorities as established in Argentina's domestic legislation,” she added.
“Negotiations continue in a constructive manner,” but are still “under discussion,” said Kozack.
Caputo reiterated Thursday that the programme will include fresh funds to recapitalise the BCRA's assets but said that this “does not imply an increase in gross debt.”
“It goes to the Treasury and then repurchases debt that the BCRA has from the Treasury,” he explained.
Several domestic media outlets have reported Argentina is looking for a fresh US$10 billion in funding, though reports on Wall Street midweek suggested as much as US$20 billion may be on the table.
Swiss bank UBS speculated in an article this week that the package would include US$8 billion in fresh funds, while the rest would be used to cover principal and interest payments Argentina is due to make during Milei's current term in office.
Analysts forecast that at least 30 percent of this new package would be available in 2025.
Milei, who has earned scorn and praise in equal measure for implementing drastic austerity measures to drive down perennially high inflation and turn a budget surplus, wants the cash to boost the Central Bank's dollar reserves.
The government has not yet indicated when it would remove strict currency and capital controls, known locally as the ‘cepo,’ though Milei has vowed that they will not be in place by the start of next year.
Adorni said Wednesday that the controls would be lifted “when the conditions are right.”
Last month, Economy Minister Luis Caputo also hinted that a deal would be agreed in the first four months of the year, indicating in an interview that only “the fine print is missing.”
IMF officials again offered praise for Milei’s government this week.
“The authorities‘ stabilisation and growth plan is yielding significant results,’” said Kozack, highlighting “noticeable progress in reducing inflation, stabilising the economy and encouraging a return to growth.”
“Poverty is finally starting to decline” in Argentina, she added.
Argentina's economy contracted 1.8 percent in 2024, a smaller drop than the minus 2.8 percent projected by the IMF), according to government data.
Annual inflation has fallen from 211 percent in 2024 to 117 percent in 2024. Last month, consumer prices increased by just over two percent – the lowest rate in years.
– TIMES/AFP/NA
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