Milei’s IMF Agreement Aims to Eradicate Inflation in Argentina
President Javier Milei has announced that a new IMF agreement aims to reduce inflation in Argentina by paying off debts at the Central Bank, attributed to excessive money supply. Economy Minister Luis Caputo emphasized the urgency of the deal, which could lead to a significant loan, possibly between $10 billion and $20 billion, aimed at stabilizing the country’s economy.
President Javier Milei asserts that a new agreement with the International Monetary Fund (IMF) will rectify the financial standing of Argentina’s Central Bank and eradicate inflation. In an op-ed featured in La Nación, he emphasized that this impending deal would facilitate the government’s repayment of debts owed to the bank. He attributes the high inflation rate in Argentina to an overabundance of currency supply, which has been exacerbated by the decline in the Central Bank’s assets.
Milei elaborated, stating, “Thus, the money received from the IMF will be used by the Treasury to cancel part of its debt with the Central Bank. Therefore, the agreement with the IMF seeks to restore the assets of the BCRA, so that inflation is only a bad memory of the past.” Economy Minister Luis Caputo reiterated the necessity of the new financial program agreed upon by Argentina and the IMF contacts, urging its urgency.
During a recent interview, Caputo indicated, “The programme and the amount have been defined with the staff [of the IMF]. The staff agreed and now what they are doing is taking it to the board, which is ultimately the one that decides whether to sign the agreement.” The agreement now awaits approval from the IMF’s executive board, which serves a crucial stabilizing role in the global economy.
An IMF representative confirmed ongoing negotiations with Argentina, which are progressing constructively while still under evaluation. Argentina anticipates finalizing this deal within the first quarter, with estimations suggesting a loan between $10 billion and potentially as high as $20 billion, according to financial analysts.
IMF spokeswoman Julie Kozack mentioned that “broad political and social support” could enhance the program’s implementation but is not a prerequisite. Furthermore, Milei indicated the government’s intention to present a decree rather than a legislative bill to garner necessary support for the agreement, citing efficiency in the process. Caputo expressed urgency, asserting that discussion in Congress could prolong the program’s inception.
As of January, Argentina experiences one of the highest inflation rates globally, recorded at 84.5 percent year-on-year. However, under Milei’s administration, which prioritizes expenditure reduction and debt management, inflation rates have shown a decrease, dropping from 211.4 percent in 2023 to 117.8 percent in 2024.
President Javier Milei’s proposed agreement with the IMF aims to stabilize Argentina’s economy by addressing Central Bank debts and curbing inflation. He attributes high inflation to excessive money supply and aims to restore Central Bank assets through this financial cooperation. The swift approval of the deal is deemed critical, with ongoing negotiations indicating a substantial loan that could alleviate some of Argentina’s economic challenges.
Original Source: www.batimes.com.ar
