Argentina’s Milei Seeks Congress Approval for IMF Loan Agreement

President Javier Milei of Argentina seeks congressional backing for an IMF loan agreement intended to stabilize the central bank and combat inflation. The deal involves a long-term repayment plan and adds to Argentina’s existing debt to the IMF. Economic experts express skepticism regarding the effectiveness of this agreement in resolving inflation issues.

On Tuesday, Argentine President Javier Milei requested congressional approval for an International Monetary Fund (IMF) loan agreement aimed at stabilizing the central bank’s finances and reducing inflation. The agreement stipulates repayment over ten years, with an initial grace period of four years and six months, according to a decree issued by Milei.

The undisclosed loan amount is part of the IMF’s Extended Fund Facility (EFF) and adds to the existing $44 billion debt Argentina owes to the IMF. The borrowed funds are intended to cancel treasury bills held by the Central Bank of Argentina (BCRA) and meet obligations under the EFF.

Under a law passed in 2021, President Milei is required to obtain authorization from Congress to finalize IMF agreements, although only support from one chamber is necessary. Although his party holds a parliamentary minority, they successfully passed previous controversial measures through this process.

A bicameral committee must review the decree within ten working days before discussions can begin in both legislative chambers. In an op-ed for La Nacion, Milei emphasized that the deal would help settle debts to the BCRA, attributing the country’s high inflation to an excess money supply and declining central bank assets.

Economist Hernan Letcher criticized the IMF deal, stating on social media that it merely shifts the debt from the government to the IMF. Argentina currently faces one of the world’s highest inflation rates, measured at 84.5% year-on-year in January. However, since Milei assumed office, inflation has decreased, dropping from 211.4% in 2023 to 117.8% in 2024 as efforts to curb spending and manage debt continue.

President Javier Milei of Argentina is pursuing congressional approval for an IMF loan to address inflation and stabilize the central bank’s finances. The deal outlines long-term repayment conditions and aims to manage Argentina’s existing debts. While the administration seeks to improve economic conditions, critique from experts suggests the agreement may not resolve the underlying issues, merely changing the lender from the state to the IMF. Inflation rates are currently high, but there are signs of deceleration under the new administration.

Original Source: thesun.my