/cloudfront-eu-central-1.images.arcpublishing.com/prisa/5UXMKNRP6YKTUZLX5DEU3HUVFU.jpg "The IMF gives support to Milei and disburses 4.7 billion for Argentina")
Argentine Government receives $4.7 billion from International Monetary Fund
On Wednesday, the Argentine Government received a disbursement of $4.7 billion from the International Monetary Fund (IMF). The disbursement is part of the payment plan that was negotiated in 2022 and represents a boost for the new Milei Government.
This disbursement is not new money, as Minister of Economy, Luis Caputo, explained on January 10. Instead, it is part of the payment plan that was renegotiated to modify the payment terms of the debt that the previous conservative government had taken.
The IMF’s support is seen as a positive move for the Milei Government. The last two revisions of the payment plan occurred in August of last year, prior to the presidential primaries, and the disbursements were closely linked to electoral campaigning. However, the IMF’s Executive Board has now approved the disbursement, signaling its support for the new administration’s efforts to stabilize the economy and address long-standing impediments to growth.
The disbursement will be used to meet debt maturities, with a portion being used to pay debt owed to the IMF itself. The rest of the disbursement will be used to pay off more debt in the upcoming months.
The Government has made commitments to the IMF to improve public finances and strengthen the exchange rate regime. However, the path to stabilization will be complicated, with the IMF forecasting a 2.8% drop in GDP and annual inflation reaching around 150% for this year.
While the disbursement from the IMF is a welcome boost, the Argentine Congress is currently debating a megalaw intended to deregulate the economy and implement other reforms. The debate is ongoing and may last until the weekend as the Government seeks to gain consensus among deputies.
The new administration has promised to turn the fiscal deficit into a surplus and accumulate reserves, although how it plans to achieve this remains to be seen.
The IMF’s disbursement represents an important milestone for the new Government as it continues to navigate the complexities of the Argentine economy.