President Javier Milei believes a new IMF deal will eliminate Argentina’s inflation by allowing the government to settle debts with the Central Bank. The agreement awaits IMF board approval, with anticipated loans of US$10-20 billion aimed at stabilizing the economy. Urgency in passing the measure is emphasized to avoid delays, as inflation slowly declines under Milei’s administration.
President Javier Milei asserts that a new agreement with the International Monetary Fund (IMF) will stabilize Argentina’s economy by eliminating inflation. In an op-ed for La Nación, he stated that the deal would enable the government to repay debts owed to the Central Bank of Argentina (BCRA). Milei attributes the high inflation rate to an excessive money supply stemming from the decline in BCRA assets. He emphasized that funds from the IMF will be utilized by the Treasury to reduce its Central Bank debt.
Milei indicated that restoring the BCRA’s assets through the IMF deal is crucial to ensuring inflation becomes a historical issue. On the day prior to Milei’s article, Economy Minister Luis Caputo confirmed that an urgent agreement was reached with IMF representatives, which is now awaiting approval from the IMF’s executive board. This board, crucial to global economic stabilization, will ultimately decide on the deal’s approval.
Ongoing negotiations with Argentina are said to be progressing constructively, as per an IMF spokeswoman. Argentina anticipates finalizing the agreement within the first quarter of the year, with local media predicting loan amounts ranging from US$10 billion to US$20 billion. While broad political support is viewed as beneficial, it is not mandatory for the Fund’s operation.
Milei has proposed circumventing a bill by sending a decree to Congress for future deal support, citing urgency—Caputo argues that legislative delays would hinder the program. Currently, Argentina suffers from one of the highest inflation rates globally, recorded at 84.5 percent year-on-year in January. Notably, since Milei’s administration took charge, inflation rates have slowed significantly from 211.4 percent in 2023 to 117.8 percent in 2024.
The proposed IMF agreement by President Milei aims to stabilize Argentina’s economy by addressing the excessive money supply contributing to high inflation. While significant loan amounts are anticipated, urgent actions are being taken to fast-track the agreement without lengthy legislative processes. The efforts indicate a strategic approach to alleviate Argentina’s challenging economic conditions and restore BCRA assets, potentially leading to reduced inflation rates.
Original Source: www.batimes.com.ar
