Milei Claims IMF Agreement to Eradicate Inflation in Argentina

President Javier Milei announced a forthcoming IMF agreement aimed at eliminating inflation by restructuring the Central Bank’s debts. Economy Minister Luis Caputo confirmed the urgency of the finance program, which is pending approval from the IMF’s executive board, with expectations of a loan ranging from US$10 to 20 billion. Inflation rates in Argentina are showing signs of improvement since Milei’s administration started.

President Javier Milei has announced that a forthcoming agreement with the International Monetary Fund (IMF) aims to rectify the accounts of Argentina’s Central Bank and eradicate inflation. In an op-ed featured in La Nación, Milei emphasized that the deal would facilitate the government in settling its debts to the Central Bank (BCRA) due to an excess money supply that has contributed to the nation’s soaring inflation.

Milei articulated that funds received from the IMF would be utilized by the Treasury to pay part of its debt to the BCRA. He further clarified that the main objective of the agreement is to restore the BCRA’s assets, thereby ensuring that inflation becomes merely a historical concern. The day prior to Milei’s op-ed, Economy Minister Luis Caputo confirmed that an agreement for a new finance program with the IMF had been established, branding the situation as urgent.

Caputo detailed in an interview with LN+ that the program and funding terms have been finalized with IMF staff and await approval from the IMF’s executive board, which plays a crucial role in global economic stability. Following these developments, an IMF spokeswoman remarked that negotiations with Argentina are progressing constructively but are still in deliberation.

Argentina aims to finalize the agreement within the first quarter of the year, with local media predicting a loan amount around US$10 billion, while Wall Street analysts speculate it could reach up to US$20 billion. Julie Kozack, an IMF spokeswoman, stated that while broad political and social support can facilitate the program’s implementation, it is not a prerequisite for the Fund’s approval.

In a strategic approach, Milei mentioned the intention to present a decree to Congress instead of a conventional bill for legislative support on a future agreement, expediting the process. Caputo supported this strategy, arguing that a lengthy debate would hinder urgent progress, and reassured that the IMF is not mandating a devaluation of the peso. In January, Argentina recorded an alarming inflation rate of 84.5 percent year-on-year, although since Milei’s administration commenced, inflation rates have begun to decline significantly from 211.4 percent in 2023 to an estimated 117.8 percent for 2024.

In summary, President Javier Milei underscores the significance of a new agreement with the IMF as a critical step towards stabilizing Argentina’s economy by addressing its high inflation rates. While the deal aims to restructure debts and restore the Central Bank’s assets, the urgency of the situation has prompted a streamlined legislative approach to expedite its approval. The recovery of Argentina’s economic stability relies heavily on the successful negotiation and implementation of this program.

Original Source: www.batimes.com.ar