Argentina’s President Moves to Secure IMF Loan via Emergency Decree

Argentina’s President Javier Milei plans to issue an Emergency Decree to approve an IMF loan aimed at reducing public debt and stabilizing the economy. This initiative seeks to enhance the Central Bank’s balance sheet and address chronic inflation. Congressional approval is needed for the decree to remain valid, although the IMF loan disbursement can proceed without it.

President Javier Milei of Argentina plans to issue an Emergency Decree (DNU) to authorize a new loan agreement with the International Monetary Fund (IMF), as revealed by the Casa Rosada. Under the law, each DNU requires congressional approval to remain valid. This deal aims to eliminate National Treasury debt to the Central Bank, thereby reducing public debt and improving the Central Bank’s balance sheet, which will, in turn, alleviate exchange restrictions.

According to the President’s Office (OPRA), “The program will allow strengthening the Central Bank’s balance sheet, an essential milestone to consolidate stability and continue the disinflation process.” The new agreement will be a public credit operation that cancels existing debt, leading to a decrease in total public debt.

The agreement is intended to reinforce the Central Bank’s balance sheet, a crucial step towards achieving monetary and financial stability while progressing with disinflation and freeing up exchange controls. The OPRA emphasized, “There is no more necessary and urgent matter than to put an end to the inflation that for years ruined the lives of Argentines.”

Economy Minister Luis Toto Caputo confirmed that the new agreement is expected to be finalized within the first four months of 2025, and he assuaged concerns regarding devaluation by stating that the IMF has not imposed such conditions. He added that these additional funds will recapitalize the Central Bank without escalating debt, promoting investments via lower taxes and increased competition.

IMF Spokeswoman Julie Kozack noted that although congressional approval is not essential for the IMF board to approve the US$ 20 billion disbursement designed for debt maturities, receiving it would facilitate a swifter endorsement.

In conclusion, Argentina’s government, led by President Javier Milei, is pursuing an Emergency Decree to sanction a loan from the IMF aimed at alleviating public debt and stabilizing the economy. The initiative is characterized by an urgent need to combat inflation, enhance the financial health of the Central Bank, and engender an environment conducive to investment. While congressional approval would expedite processes, it remains non-essential for the disbursement of the loan.

Original Source: en.mercopress.com