Argentina’s President Proposes IMF Loan Approval via Emergency Decree

Argentine President Javier Milei plans to issue an Emergency Decree to obtain a new IMF loan aimed at reducing public debt and reinforcing the Central Bank’s stability. The agreement is crucial for combating inflation and fostering economic recovery, garnering congressional support to expedite the process. Economy Minister Luis Toto Caputo indicated that the expected funds would not increase debt but would assist in enhancing investment through lower taxes.

Argentine President Javier Milei intends to implement an Emergency Decree (DNU) to formalize a new loan agreement with the International Monetary Fund (IMF), as announced by Casa Rosada. Per legal requirements, congressional approval is necessary for the DNU to remain valid. This new arrangement aims to eliminate National Treasury debt owed to the Central Bank, thereby decreasing total public debt and bolstering the Central Bank’s financial stability, along with improving exchange restrictions.

According to the Office of the President (OPRA), “The program will allow strengthening the Central Bank’s balance sheet, an essential milestone to consolidate stability and continue the disinflation process.” The official document further states that this public credit operation will effectively reduce the total public debt by canceling existing liabilities with the Central Bank.

The OPRA highlighted the significance of this agreement by noting, “The net result of this operation will imply a reduction of the total public debt.” The expected outcome is to enhance monetary, financial, and macroeconomic stability, thus facilitating the continuation of disinflation and easing exchange limitations.

Stating the urgency to combat inflation, OPRA asserted, “There is no more necessary and urgent matter than to put an end to the inflation that for years ruined the lives of Argentines.” President Milei seeks immediate congressional support, reflecting a continued commitment from national representatives.

Economy Minister Luis Toto Caputo affirmed at a Mendoza business forum that the agreement is anticipated to unfold within the first four months of 2025, downplaying fears of currency devaluation, as the IMF has not mandated such actions. He articulated that these new funds will recapitalize the Central Bank without exacerbating the national debt, aiming to foster investments by lowering taxes and promoting competition.

IMF Spokeswoman Julie Kozack emphasized that although congressional approval is not essential for the IMF board to approve the US$ 20 billion disbursement intended for debt maturities, obtaining Parliament’s agreement would expedite the process.

President Javier Milei’s initiative to secure an IMF loan through an Emergency Decree signifies a strategic move to alleviate Argentina’s public debt and strengthen its Central Bank. The process emphasizes the urgency of addressing inflation and enhancing economic stability. With the proposed measures aimed at fostering investment, the cooperation of Congress will be critical in expediting this financial agreement.

Original Source: en.mercopress.com