MercoPress. South Atlantic News Agency

Argentina gets fresh cash from IMF for impending maturities

“We have to solve the country's addiction to public spending,” Caputo argued

The Argentine Government of President Javier Milei Wednesday reached an understanding with the International Monetary Fund (IMF) whereby the global credit agency will make a disbursement of nearly US$ 4.7 billion, Economy Minister Luis Toto Caputo confirmed during a press conference in Buenos Aires.

“The Extended Facilities Agreement reached with the International Monetary Fund has been revived,” Caputo said after he and Cabinet Chief Nicolás Posse held talks with an IMF delegation led by economists Luis Cubeddu and Ashvin Ahuja earlier this week during which the previous deal was reinstated after it was technically defaulted by the previous administration of then-President Alberto Fernández and Economy Minister Sergio Massa for failing to meet the fiscal deficit caps.

“President Javier Milei and his economic team acted quickly and decisively to develop and implement a solid policy package with the objective of restoring macroeconomic stability, demonstrating full determination to bring the current program back to the right course,” a statement read.

Caputo insisted it was not “a new agreement” and explained that the money Argentina would receive would be “to pay the capital maturities corresponding to December, January, and April.”

“Now the IMF staff will send to the Board the decision with the new targets subject to the Board's approval, with a disbursement of 4.7 billion dollars” for Argentina, the Minister also pointed out while warning that if the so-called Omnibus Law is not approved by Congress “it would be very bad news” because it would entail “tougher measures” that would be hard on all Argentines. Caputo also argued that the bill was “what Milei promised in his campaign.”

“We have to solve the country's addiction to public spending. The President's policies are in line with what the IMF is asking for,” he also underlined.

Central Bank (BCRA) President Santiago Bausili noted that the IMF pact contemplated “the reconstitution of the entity's balance sheet, the reserves, and the fiscal anchor as the center of the macroeconomic balance sheet and a reduction of inflation.”

“The IMF is comfortable with the way the monetary and exchange targets are set and the reserves accumulation target for this year is 10,000 million dollars,” Bausili also explained.

The IMF issued a press release stating that “as policies are implemented and credibility is rebuilt, a gradual process of disinflation should begin, accompanied by a further strengthening in reserves and an eventual recovery in production, demand, and real wages.”