Argentina, led by President Javier Milei, aims for a new IMF loan agreement by April 2024, building on a previous US$44 billion loan. The deal, which seeks to recapitalize the Central Bank without increasing debt, will require congressional consultation. The government is negotiating funding ranging potentially from US$10 billion to US$20 billion to boost dollar reserves while maintaining strict capital controls until favorable conditions arise.
Argentina’s government, under President Javier Milei, is aiming to establish a new loan agreement with the International Monetary Fund (IMF) by the end of April. The proposed deal would build upon the prior US$44 billion loan from 2018. Presidential Spokesperson Manuel Adorni stated that the agreement should be finalized within the first four months of 2024, contingent on negotiations making progress.
Adorni mentioned that any agreement is expected to involve the recapitalization of the Central Bank but stressed it would not increase the national debt. He also noted that Congress would be consulted regarding the feasibility of the deal, although it remains unclear when lawmakers will have input on the negotiations.
In December, Argentina and the IMF confirmed ongoing discussions for a new financing program, as the previous agreement faced challenges in 2024 due to deteriorating relations. The new arrangement aims to refinance outstanding debt from the earlier US$44.5 billion loan.
In his recent state of the nation address, President Milei affirmed progress was being made with the IMF and expressed intentions to seek congressional support soon. Reports indicate that Argentina is pursuing US$10 billion in new funding, with some estimates suggesting a potential figure as high as US$20 billion.
UBS analysts speculated that the intended package could include US$8 billion in fresh funds, with the remainder allocated for principal and interest obligations during Milei’s term. Furthermore, it is anticipated that approximately 30 percent of the package would be accessible in 2025.
Milei has implemented strict austerity measures aimed at curbing high inflation and generating a budget surplus. He is seeking additional cash to enhance the Central Bank’s dollar reserves. The government has yet to outline a timeline for lifting currency and capital controls, known as the ‘cepo,’ although Milei assured they will not be effective by early next year. Adorni reiterated that these measures would be lifted when appropriate conditions arise.
Additionally, Economy Minister Luis Caputo hinted at the likelihood of concluding a deal within the first four months of the year, noting only minor details remained before finalization.
In conclusion, Argentina’s government is strategically pursuing a new loan agreement with the IMF to stabilize its economy and manage existing debts. The focus on congressional consultation and the conditions for lifting capital controls demonstrates a careful approach to financial negotiations, while the government’s emphasis on austerity and enhancing Central Bank reserves highlights its commitment to addressing inflation and fiscal health. As discussions progress, the outcome will significantly impact Argentina’s economic trajectory.
Original Source: www.batimes.com.ar
