Economy Minister Luis Caputo denied that the IMF required Argentina to devalue its currency for a financing agreement. As President Javier Milei’s government seeks new funds, Caputo emphasized a focus on tax reduction and competition as solutions. Both leaders expect to finalize a deal soon, contingent on congressional approval and improved economic conditions.
Luis Caputo, Argentina’s Economy Minister, emphasized on Thursday that the International Monetary Fund (IMF) has not mandated the devaluation of Argentina’s currency as a condition for a new financing agreement. In a radio interview, Caputo rejected claims that a fresh funding deal would trigger inflationary pressures in the country. He asserted, “It is true that there are high prices in dollars [in Argentina], but devaluation is not the solution.” He advocates for reducing taxes and enhancing competition instead.
President Javier Milei’s administration aims to secure a new loan agreement with the IMF within the upcoming two months. Milei’s office has announced intentions to submit a decree to Congress to gain legislative approval for this new agreement, which will enable the National Treasury to pay off existing debt with the Central Bank.
According to Presidential Spokesperson Manuel Adorni, the new deal, which is in addition to the US$44-billion loan extended in 2018, is expected to be finalized within the first four months of the year. He mentioned that detailed information would be disclosed once negotiations are concluded. Caputo reiterated confidence in reaching a deal soon, indicating that principal aspects of Argentina’s economic plan have already been discussed with IMF representatives.
Delays in finalizing the agreement may arise from challenges in securing congressional approval or potential bureaucratic hurdles, Caputo implied. Adorni noted that any agreement would necessitate input from Congress to assess its viability, although he did not clarify at which stage lawmakers might contribute.
Cabinet Chief Guillermo Francos highlighted that congressional endorsement is crucial, stating that an approval by decree is unrealistic because the IMF requires legal certainty. Furthermore, Argentina and the IMF confirmed ongoing negotiations for a new funding program in December; however, the amount of new funds sought by Milei’s government remains unspecified.
Argentina’s earlier financing program, valued at US$57 billion, was arranged in 2018 under former President Mauricio Macri and subsequently renegotiated in March 2022 under Alberto Fernández. The prior agreement faltered by the end of 2024. A new deal is expected to tackle the remaining debt from prior funds received.
Despite this uncertainty, the IMF has maintained silence regarding President Milei’s statements about seeking congressional support for a new agreement. An IMF spokesperson stated that discussions are ongoing in a constructive manner, and while congressional backing is appreciated, it is not mandated for negotiations to proceed.
Caputo indicated that the upcoming program would entail fresh funds to strengthen the Central Bank’s financial standing, clarifying that this move will not augment gross debt levels. Some domestic reports speculate that Argentina may seek as much as US$10 billion in new funding, with estimations on Wall Street suggesting up to US$20 billion. UBS anticipates a package containing US$8 billion in new capital, with the remainder designated for existing principal and interest obligations.
Milei aims to use these funds to bolster the Central Bank’s dollar reserves amid debates on when to lift existing currency controls. Adorni stated that such restrictions would be removed when conditions allow, while Caputo hinted at finalizing an agreement early this year, noting only minor details remain.
In recent statements, IMF representatives commended Milei’s government for efforts in economic stabilization and growth, recognizing significant achievements in controlling inflation and steering economic recovery. According to government data, Argentina’s economy contracted by 1.8 percent in 2024, less than the IMF’s prediction, with inflation rates dropping significantly from 211 percent the previous year to 117 percent this year.
In summary, Economy Minister Luis Caputo firmly refuted claims of mandatory currency devaluation by the IMF as part of a prospective financing deal for Argentina. The government’s objective is to secure new funding while optimizing its economic program through tax reductions and fostering competition. Both Caputo and President Milei anticipate finalizing a new agreement with the IMF shortly, despite the need for congressional approval and favorable conditions for lifting currency controls. Recent progress in inflation and economic recovery has received commendation from IMF officials, reflecting a collaborative approach to stabilize Argentina’s economy.
Original Source: www.batimes.com.ar
