MercoPress. South Atlantic News Agency

Argentina secures $20B IMF deal, aims to boost Central Bank reserves to $50B

Milei said there would be no devaluation because the problem is the lack of pesos, not the lack of dollars

Argentina’s Economy Minister Luis Toto Caputo announced Thursday that the loan negotiated with the International Monetary Fund (IMF) amounts to US$ 20 billion disbursement from the IMF, which, in addition to further borrowing from the Interamerican Development Bank (IDB), the World Bank, and the CAF would leave the Central Bank's (BCRA) reserves around US$50 billion.

“Adding IDB, WB, and CAF, we will be around US$ 50 billion in gross reserves. The monetary base is US$ 25,000 billion at the official dollar, and at the free exchange rate, it is US$ 20,000. Therefore, we will have more than twice the amount of reserves than the monetary base”, said the minister at the opening of the XXIII Annual Conference on Insurance Regulation and Supervision in Latin America held at the Buenos Aires Stock Exchange.

He also highlighted the unprecedented reserve backing compared to the monetary base, even surpassing the convertibility era, and accused the opposition of destabilizing efforts amid recent market unrest. “The level of backing that the Central Bank's liabilities will have in a few days has never been seen before; not even during the convertibility period and also with a fiscal surplus,” he further argued.

President Javier Milei supported the plan, denying rumors of a devaluation and emphasizing that the deal reinforces the peso with dollar reserves, not new debt. ”What Minister Luis Caputo said today is that the operation we are working on is for US$ 20 billion, which added to that of the World Bank, the IDB and the CAF will allow taking the gross reserves of the Central Bank of the Argentine Republic (BCRA) to at least US$ 50 billion,“ confirmed Milei in a radio interview.

This operation with the IMF is completely ”different to what has happened in the history of Argentina“ because the country ”has already made the adjustment, much deeper than what the IMF itself demands,” Milei also explained. He also said there would be no devaluation because the problem in the country is the lack of pesos, not the lack of dollars.

However, former President Cristina Fernández de Kirchner (CFK) criticized her political rivals for receiving US$65 billion from the IMF (US$45 billion in 2018 under then-President Mauricio Macri) while pointing to Caputo’s recurring role in such deals.

CFK insisted that Milei's “expertise without dollars does not work.” She also wondered in a message to Milei, “You received 65 billion dollars, that you are going to smoke between now and this year's elections, and the thieves are us?” She further noted that of the US$ 65 billion disbursed by the IMF, the average Argentine did not see a penny.