Argentine President Javier Milei announces plans for an Emergency Decree to approve a new IMF loan aimed at reducing National Treasury debt to the Central Bank. The deal is expected to enhance stability and facilitate disinflation. Economy Minister Caputo confirms that the agreement is anticipated in early 2025, while IMF’s Kozack states Congressional approval is not mandatory for fund disbursement but could expedite it.
Argentine President Javier Milei is set to issue an Emergency Decree (DNU) to approve a new loan arrangement with the International Monetary Fund (IMF), as announced by Casa Rosada on Thursday. Each DNU requires congressional approval under the law to avoid being annulled. This new agreement aims to eliminate National Treasury debt to the Central Bank, thereby decreasing overall public debt and enhancing the balance sheet of the Central Bank, which is expected to alleviate exchange restrictions.
The Office of the President (OPRA) emphasized that the initiative will fortify the Central Bank’s balance sheet, a critical step in achieving stability and continuing the disinflation process. According to OPRA, the deal will facilitate a public credit operation that involves the National Treasury cancelling its existing debt with the Central Bank, leading to a net reduction in total public debt.
Furthermore, the OPRA stated that this understanding is pivotal for consolidating monetary, financial, and macroeconomic stability while contributing to the disinflation effort and lifting exchange controls. OPRA highlighted the urgency of addressing the inflation crisis, which has adversely affected Argentines, and expressed hope for a swift consensus from Congress, mirroring actions taken by prior administrations.
Economy Minister Luis Toto Caputo, at a business forum in Mendoza, affirmed that the agreement is projected for the first four months of 2025 and reassured that there is no requirement for devaluation, as the IMF did not mandate such actions. He added that the forthcoming “fresh funds” would recapitalize the Central Bank without increasing national debt, thus promoting investment through reduced taxes and enhanced competition.
IMF Spokeswoman Julie Kozack clarified that Argentina’s Congressional approval is not a prerequisite for the IMF board to approve the US$20 billion disbursement meant to address debt maturities. However, securing parliamentary approval would facilitate this process more expeditiously.
In summary, President Javier Milei’s issuance of an Emergency Decree marks a significant step towards obtaining a new IMF loan aimed at alleviating Argentina’s debt issues. This initiative is expected to strengthen the Central Bank’s financial standing and combat inflation, highlighting the government’s commitment to economic recovery. Securing congressional support remains vital for the swift implementation of these measures.
Original Source: en.mercopress.com
