Argentina Targets New IMF Loan Agreement by April 2024

Argentina’s government, led by President Javier Milei, aims to finalize a new IMF loan agreement by the end of April 2024. The deal seeks to refinance existing debts and potentially involve Central Bank recapitalization. Congressional approval is required, and discussions are progressing, with estimates for funding ranging from US$10 to US$20 billion.

President Javier Milei’s administration is actively pursuing a new loan agreement with the International Monetary Fund (IMF) within the next two months. This agreement is a continuation of the record US$44 billion loan awarded in 2018, with Presidential Spokesperson Manuel Adorni stating that the deal should be finalized within the first four months of the year. He emphasized that details will be disclosed once the agreement is finalized.

Any potential IMF agreement is expected to involve recapitalization of the Central Bank, according to Adorni, who reassured that it would not increase national debt. He noted that Congress will be consulted regarding the viability of this deal, although the timeline for when lawmakers will be involved remains unclear. Existing regulations require any new deal to receive legislative approval.

The IMF and Argentina have been engaged in discussions about a new financing program since December. The previous program, initially valued at US$57 billion under former President Mauricio Macri in 2018, was renegotiated in March 2022. However, relations between Argentina and the IMF became strained towards the end of 2024.

The proposed deal aims to refinance remaining debt from the US$44.5 billion extended to Argentina in recent years. President Milei mentioned in his recent address that progress is being made and indicated plans to seek congressional support shortly. Reports suggest Argentina is seeking between US$10 billion to US$20 billion in funding, with UBS estimating that the new package may include US$8 billion in fresh funds, designated for both new financing and existing debt obligations.

Milei’s urgent need for cash is tied to enhancing the Central Bank’s foreign currency reserves amidst his stringent economic measures aimed at reducing inflation and achieving a budget surplus. The government has yet to clarify when it will lift stringent currency restrictions, commonly referred to locally as ‘cepo.’ Adorni stated the controls will be removed once conditions are favorable, while Economy Minister Luis Caputo similarly pointed to an impending agreement, noting that only minor details remain to be addressed.

In summary, Argentina is negotiating a new loan agreement with the IMF, aiming for completion within the upcoming months. This deal is crucial for refinancing existing debt and boosting the Central Bank’s reserves. The government is set to consult Congress on the agreement’s viability, adhering to legal requirements. Milei’s administration continues to implement austerity measures while strategizing for economic stabilization and growth.

Original Source: www.batimes.com.ar