President Milei has requested congressional approval for a loan agreement with the IMF, aimed at stabilizing the central bank’s finances and combating inflation. Although the loan amount is undisclosed, it contributes to an existing $44 billion debt and seeks to restore central bank assets. Critics argue it only shifts creditors from the state to the IMF as inflation trends show slight improvements.
Argentine President Javier Milei has called on lawmakers to approve an agreement for an International Monetary Fund (IMF) loan. He asserts that this agreement will rectify the financial condition of Argentina’s central bank and help to eliminate inflation. According to a decree released early Tuesday, the loan includes repayment of capital over a decade with a grace period of four and a half years.
The exact amount of the new loan, part of the IMF’s Extended Fund Facility (EFF) program, was not disclosed. However, it adds to the existing $44 billion debt Argentina owes the IMF. Reportedly, the funds will be allocated to pay off treasury bills held by the central bank and meet obligations under the EFF program.
Per a law enacted in 2021, President Milei requires approval from both houses of congress to finalize any IMF agreements. Nevertheless, only one chamber’s approval is required for the agreement to take effect. While Milei’s party holds a minority in parliament, they previously secured approval for controversial measures by this method.
A bicameral congressional committee must review the decree within 10 working days before the debates can commence in both chambers. In an opinion piece for La Nacion, Milei expressed that the loan deal would enable the government to settle its debts with the central bank, attributing high inflation partially to an excess money supply stemming from degraded central bank assets.
Milei emphasized that the IMF agreement aims to restore the central bank’s assets and eradicate inflation. Despite Argentina being one of the countries with the highest inflation rates globally, recent data shows a decline in inflation from 211.4% in 2023 to 117.8% in 2024 since Milei’s administration began, indicating that price rises have slowed.
Economist Hernan Letcher has critiqued the loan deal, arguing that it merely shifts the creditor from the government to the IMF. Argentina’s inflation rate stood at 84.5% year-on-year as of January, demonstrating the ongoing economic challenges the country faces.
In summary, President Javier Milei has urged the Argentine congress to support an IMF loan agreement expected to stabilize the economy and reduce inflation. The deal, which includes a long-term repayment structure, is aimed at alleviating the country’s financial obligations, despite some criticism from economists. As inflation shows signs of slowing since Milei took office, the future implications of this loan could significantly impact Argentina’s economic landscape.
Original Source: thesun.my
