The International Monetary Fund on Tuesday announced it had reached a preliminary agreement with Argentina on a US$20-billion four-year loan arrangement to support a "comprehensive economic programme."
Confirmation of the deal is a shot in the arm for President Javier Milei, coming at a tine of domestic and international turbulence.
Milei and his team had promised a deal by mid-April, ahead of the financial organisation's spring meetings. The IMF statement fits that calculation.
The multilateral lender said it had reached a staff-level agreement on the programme that was subject to approval by its executive board, which is expected to consider the proposal "in the coming days."
According to reports in financial media outlets, that meeting will take place on Friday in Washington.
"The agreement builds on the authorities' impressive early progress in stabilising the economy, underpinned by a strong fiscal anchor, that is delivering rapid disinflation and a recovery in activity and social indicators," read a statement from the IMF issued late Tuesday.
The IMF did not comment on the amount of the first disbursement of the “48-month arrangement.” The Milei administration wants more than 40 percent of total fresh funds up front.
The La Libertad Avanza government had earlier announced that Argentina – the IMF's biggest debtor by far – was in talks over the new loan, which comes on top of the US$44 billion it already owes.
The country's previous loan, agreed in 2018 during former president Mauricio Macri’s government, was the biggest ever by the Washington-based lender of last resort to Argentina, a serial defaulter.
In all, the IMF has bailed out Argentina 22 times.
Economy Minister Luis Caputo said last month that the new money would be used to recapitalise the country's Central Bank and cover obligations owed to the IMF under its existing programme.
Milei said that the loans would increase the Central Bank's reserves to "at least" US$50 billion, compared to US$26.23 billion at present.
The IMF said the programme "supports the next phase of Argentina's homegrown stabilisation and reform agenda."
The prospect of another IMF loan has caused a run on the peso, prompted by fears that the new deal could entail a possible devaluation, which Milei has repeatedly ruled out.
A sell-off of Argentina's currency drained reserves by more than US$1.2 billion in late March.
Milei, a self-described "anarcho-capitalist," came to office in December 2023 pledging to cut spending, tame inflation and fix a steep fiscal deficit.
In the last six months, the peso has fallen about 10 percent to the US dollar.
Argentina has one of the highest inflation rates in the world, but under Milei it has fallen from 211 percent year-on-year at the end of 2023 to 84.5 percent in January.
The President has said a new IMF deal will help ensure that "inflation is only a bad memory."
Caputo said last month Argentina was also negotiating loans with the World Bank and the Inter-American Development Bank, as well as the CAF regional development bank.
Both Milei and Caputo celebrated the IMF’s confirmation in posts on social media.
There was little comment as to the future of the ‘cepo,’ Argentina’s strict system of currency and capital controls that limit access to foreign currency.
Presidential Spokesperson Manuel Adorni explained last week at a press conference that controls would not be lifted immediately after the agreement is reached.
“Everyone knows that the IMF programme does not immediately imply the lifting of the cepo in its entirety, the day after the agreement is signed,” he said.
– TIMES/AFP
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