Economy Minister Luis Caputo denied that the IMF has demanded currency devaluation for Argentina’s new financing deal. President Milei’s government aims for a deal within two months, linked to congressional approval and managing existing debt. A possible $10-20 billion funding request is under discussion as the country seeks to stabilize its economy amidst declining inflation and poverty rates.
Economy Minister Luis Caputo stated that contrary to reports, the International Monetary Fund (IMF) did not demand Argentina devalue its currency for a new financing deal. During a radio interview, Caputo emphasized that while dollar prices are high in Argentina, devaluation is not the answer; he believes prices should decrease through reduced taxes and enhanced competition.
President Javier Milei’s administration aims to secure a new loan agreement with the IMF in the next two months. A decree will be presented to Congress for legislative backing of the new agreement, which aims to manage existing debt with the Central Bank. The plan includes a public credit operation to address outstanding debts.
Presidential Spokesperson Manuel Adorni indicated that the deal should be finalized within the first four months of the year. He noted, “When there are details, we will give them to you.” Caputo confirmed that most components of Argentina’s economic program have been preliminarily agreed upon with IMF representatives. Delays, he suggested, would stem from congressional approval or bureaucratic processes.
Any forthcoming agreement will involve recapitalizing the Central Bank and, according to Adorni, will not lead to increased national debt. The government is keen on exploring Congress’s opinions regarding the deal’s viability but has not specified the timeline for legislative input.
Discussions about a new financing program between the IMF and Argentina began last December, with the amount to be requested by the government yet undisclosed. Previous terms outlined a $57 billion deal established by former President Mauricio Macri, which underwent renegotiation in 2022 but collapsed due to deteriorating relations with the IMF.
Recent media reports suggest Argentina may seek between $10 billion to $20 billion in fresh funding. Analysts anticipate that at least 30% of the new package could be accessible in 2025, with some funds directed to augment the Central Bank’s dollar reserves. The implementation of prior currency and capital controls, locally termed the ‘cepo,’ remains uncertain, although Milei aims to lift them by year’s end.
Caputo reiterated that the program will integrate new funds without increasing gross debt, asserting that funds redirected would support treasury objectives and debt repurchase. The IMF praised the Milei government’s economic stabilization efforts, reporting noticeable advancements in curbing inflation and fostering economic growth, with a slight reduction in poverty reported in Argentina.
Recent data reflected a contraction of 1.8% in the Argentine economy for 2024, a modest reduction compared to earlier IMF predictions of 2.8%. Yearly inflation has seen a significant decline from 211% to 117% over the year, with a modest consumer price increase of just over 2% last month.
The article outlines Economy Minister Luis Caputo’s firm stance against devaluing Argentina’s currency as part of negotiations with the IMF for a new financing deal. The government is advancing towards a congressional decree to support the agreement, which is expected to be finalized in the first four months of the year. The potential deal aims to manage existing debt and augment Central Bank reserves while signaling a striving stabilization of the Argentine economy. IMF officials have noted recent progress in reducing inflation and economic contraction, suggesting a cautious optimism for Argentina’s financial trajectory.
Original Source: www.batimes.com.ar
