The Government of Argentina and the International Monetary Fund (IMF) reached an agreement this Wednesday for the Fund to disburse the country 4.65 billion dollars, about 4.2 billion euros, within the framework of the current program between the two.
The funds are a lifeline for a country in crisis, which will be used to face upcoming debt maturities and to support "the strong political efforts" of the Government of Javier Milei, according to a statement issued by the entity.
The agreement is subject to approval by the IMF executive board. It has been reached on a "reinforced set of policies" that will lead to the restoration of the country's macroeconomic stability and put the current program on track after its key objectives "have not been achieved by wide margins due to the serious political setbacks of the previous government".
The statement, which uses a harsher tone than usual, highlights that "the program seriously deviated" and that "the September goals for the primary fiscal deficit were not met and preliminary data suggest that the year-end goals were breached by an even greater margin", in reference to the mandate of Peronist Alberto Fernández (2019-2023). Nor were net international reserves objectives met.
For this reason, the Fund has praised the policies of the ultra-liberal Milei Government, which it has described as an "ambitious stabilization plan." "It is already implementing an ambitious stabilization plan, based on a large initial fiscal consolidation, along with actions to rebuild reserves, correct relative price imbalances, strengthen the central bank's balance sheet and create a simpler, rules-based and targeted system. to the market".
This disbursement, which will serve to pay the capital maturities corresponding to December, January and April, concludes the seventh review - scheduled for after the second electoral round on November 19 - of the extended facilities program signed with the entity in March 2022 to refinance the debt contracted in 2018 during the government of Mauricio Macri (2015-2019) for about 45 billion dollars.
In a press conference after confirming the agreement, the Minister of Economy, Luis Caputo, denied that it was "a new agreement", but that the Executive tried to "refloat" the existing one because the other "would have involved much more time" , so that "the most viable alternative" was "to get the money to pay the Fund and manage to revive the agreement to guarantee that there will be no surprises in the next four months."
The last time Caputo had negotiated with the IMF, back in 2018 under the Macri government, strong disagreements over how to manage the Argentine currency led him to resign from the position of president of the central bank that he held. "We have full confidence that the measures we are taking will lead us on the right path and, the truth is, today we feel that it is the best for Argentines," he stated.
