Argentina agrees on a new financial arrangement with the IMF
A new agreement between the Government of Argentina led by Javier Milei and the International Monetary Fund has been announced, ensuring that Argentina will continue paying its debt of 44,000 million dollars with the multilateral organization. The technical agreement reached during the IMF’s visit to the new far-right government, resulting in a disbursement of 4.7 billion dollars, must be endorsed by the IMF’s board and will depend on the continuous and lasting implementation of the fiscal adjustment announced by the new Argentine Government in mid-December.
According to a statement by the IMF, the new Argentine government is implementing an ambitious stabilization plan based on fiscal consolidation, rebuilding reserves, correcting relative price imbalances, strengthening the balance sheet of the Central Bank, and creating a simpler, rules-based, and market-oriented system. This is not considered a new agreement, but rather a revival of the previous agreement that was down due to non-compliance with goals.
The government had been warning for days that the payment plan signed with the IMF to comply with the debt assumed by the previous administration was in danger due to the failure to meet fiscal adjustment and reserve accumulation goals. However, the IMF has celebrated the initial actions taken by the new government, expressing its confidence in the country’s economic plan.
Despite the challenges inherited by the new government, the IMF expressed hope that Argentina will be able to end this year with net reserves of 10 billion dollars and a fiscal surplus. Minister of Economy, Luis Caputo, emphasized that President Milei has taken bold measures and has shown enormous courage to implement necessary reforms. If these reforms do not pass, Caputo warned that measures will become even tougher.
The new agreement signals a more orthodox and pro-market approach in Argentina’s relations with the IMF under the far-right government. This alignment also represents a shift in Argentina’s international stance, particularly as the country recently renounced its membership in the BRICS economic alliance. As a result, Argentina will now depend solely on the IMF for financial support.