Argentine President Javier Milei seeks congressional approval for an IMF loan agreement aimed at stabilizing the central bank’s finances and controlling inflation. The loan will extend repayment over ten years, alongside a grace period. Critics question the efficacy of the deal, highlighting risks in shifting creditors. The process will unfold in Congress shortly as the government strategizes its financial recovery.
On Tuesday, Argentine President Javier Milei appealed to Congress for approval of an International Monetary Fund (IMF) loan agreement. He asserts that this agreement will enable the stabilization of the country’s central bank accounts and eliminate rampant inflation. The agreement includes provisions for the repayment of the loan capital over a decade, with an initial grace period of four and a half years.
The specific amount of the loan, part of the IMF’s Extended Fund Facility (EFF) program, was not disclosed. This funding will supplement the $44 billion already owed by Argentina to the IMF. The borrowed funds are earmarked for settling treasury bills held by the Central Bank of Argentina (BCRA) and fulfilling obligations under the EFF program.
According to a 2021 law, President Milei must secure authorization from both legislative chambers to sign IMF agreements; however, he only requires approval from one chamber for implementation. Despite his party holding a minority position in Parliament, Milei successfully utilized this legislative mechanism last year to gain approval for two controversial decrees.
A bicameral congressional committee is expected to provide an opinion on the decree within ten working days, facilitating discussions in both legislative chambers. In a recent op-ed in La Nacion, President Milei asserted that the IMF agreement will enable the government to settle its debts with the BCRA.
Milei attributed Argentina’s persistently high inflation, recorded at 84.5 percent year-on-year as of January, to excessive money supply stemming from the deterioration of central bank assets. He emphasized that “the agreement with the IMF seeks to restore the assets of the BCRA, so that inflation is only a bad memory of the past.”
Economists express skepticism, with Hernan Letcher, director of the Argentine Center for Economic Policy, criticizing the agreement as merely “changing the creditor: from the State itself, to the IMF.” Despite Argentina’s high inflation rates, Milei’s administration has seen a decrease in inflation from 211.4 percent in 2023 to 117.8 percent in 2024, attributed to spending cuts and tackling government debt.
In summary, President Javier Milei’s request for congressional approval of an IMF loan agreement seeks to stabilize Argentina’s economy by addressing the central bank’s financial issues and curbing inflation. The agreement’s provisions extend the loan repayment over ten years, with a grace period of four and a half years. While Milei portrays the deal as a solution to restore financial stability, critics caution against merely shifting the burden of debt to the IMF without addressing underlying economic challenges. The congressional process will unfold in the coming weeks as Argentina navigates these critical financial negotiations.
Original Source: thesun.my
