Argentine President Javier Milei seeks Congress approval for an IMF loan aimed at stabilizing the central bank’s finances and reducing inflation. The deal involves a long repayment period and will supplement $44 billion already owed to the IMF. Opposition voices have raised concerns regarding the adequacy of the agreement amidst high inflation rates.
Argentine President Javier Milei has requested Congress to endorse a loan agreement with the International Monetary Fund (IMF), which he asserts will resolve the financial issues of the country’s central bank and combat inflation. The IMF deal involves a repayment period of up to ten years, including a grace period of four years and six months, as outlined in a presidential decree published after midnight on Tuesday.
The specific amount of the new funding, which is part of the IMF’s Extended Fund Facility program, remains undisclosed. This loan will supplement the $44 billion that Argentina already owes the IMF. According to the decree, the borrowed funds will be allocated to cancel treasury bills held by the Central Bank of Argentina (BCRA) and meet obligations under the EFF program.
Under existing legislation, Milei is required to seek authorization from both houses of Congress to finalize agreements with the IMF; however, he only needs the support of one chamber for the agreement to be enacted. Although Milei’s political party holds a minority in parliament, they effectively navigated the legislative process previously to gain approval for controversial measures.
A bicameral congressional committee is tasked with reviewing the decree within ten working days before it can be debated in both chambers of Congress. In an opinion piece published in La Nacion, Milei emphasized that the IMF agreement would facilitate debt repayment to the BCRA and mitigate the factors contributing to Argentina’s high inflation rates.
Milei has attributed Argentina’s ongoing inflation, currently at 84.5 percent year-on-year, to an excess money supply linked to diminishing central bank assets. He argued, “The agreement with the IMF seeks to restore the assets of the BCRA, so that inflation is only a bad memory of the past.”
Critiquing the agreement, economist Hernan Letcher stated on X that the deal merely shifts the nature of the creditor from the State to the IMF. While Argentina initially experienced high inflation rates peaking at 211.4 percent in 2023, there has been a noticeable decline since Milei’s inception into office, with inflation now recorded at 117.8 percent for 2024 due to measures aimed at reducing government spending and addressing debt.
In summary, President Javier Milei’s request for congressional approval of an IMF loan agreement seeks to stabilize Argentina’s economy by addressing central bank debts and combating inflation. Although the specifics of the loan remain undisclosed, its implications are significant given the country’s current economic climate. Nevertheless, concerns about the adequacy of such measures have been raised by economic experts, highlighting potential risks of merely changing creditors.
Original Source: www.hurriyetdailynews.com
