The Government of Javier Milei and the International Monetary Fund have reached a new agreement for Argentina to continue paying off its $44 billion debt to the IMF. After almost a week of deliberations with the IMF, the government has secured a new disbursement of $4.7 billion, contingent on the implementation of fiscal adjustments. The funds are not a new loan but are part of the scheduled disbursements agreed upon between December 2021 and the first quarter of 2024. The IMF has lauded the government’s implementation of a stabilization plan and expressed willingness to consider additional funding in the future.
However, the Argentine government had previously signaled that the repayment plan for the debt to the IMF was “virtually fallen” due to non-compliance with fiscal adjustment and reserve accumulation goals. These issues were inherited from the previous Peronist government.
The new agreement with the IMF marks the start of a more orthodox and pro-market stage in Argentina’s relations with the organization. The alignment with the IMF reflects Milei’s broader foreign policy goals, including distancing the country from countries he considers “communist”, such as Brazil and China. This move is part of Milei’s push to make Argentina’s economic adjustment effective enough to rely solely on the IMF.
The IMF’s expectations are for Argentina to end the year with $10 billion in net reserves and a fiscal surplus. Minister of Economy, Luis Caputo, emphasized the government’s commitment to enacting reforms to streamline the country’s state and private sectors as part of its efforts to meet the IMF’s objectives.
This new agreement represents a significant milestone for Argentina and sets the stage for the country’s economic recovery under the leadership of Javier Milei.