Milei Appeals to Congress for IMF Loan Agreement to Address Inflation

Argentine President Javier Milei has sought congressional approval for an IMF loan agreement intended to stabilize the central bank and combat inflation. The deal includes a ten-year repayment plan and aims to address Argentina’s financial challenges amid high inflation rates, which recently have shown signs of easing.

Argentine President Javier Milei recently urged lawmakers to endorse a loan agreement with the International Monetary Fund (IMF). He claims that this agreement will stabilize the central bank’s finances and reduce inflation. The proposed deal extends the repayment of the loan over ten years, incorporating a grace period of four and a half years, as outlined in a decree published early Tuesday.

The agreement, part of the IMF’s Extended Fund Facility (EFF), adds to Argentina’s existing debt of $44 billion owed to the IMF. The specifics of the newly borrowed sum have not been disclosed, but it is intended to settle treasury bills held by the Central Bank of Argentina (BCRA) and fulfill obligations related to the EFF program.

According to a 2021 law, President Milei requires Congress to authorize agreements with the IMF. However, he only needs the backing of one chamber for the deal to proceed. Although his party holds a minority in parliament, Milei successfully navigated this process last year with two controversial decrees.

A bicameral congressional committee must review and provide an opinion on the decree within ten working days before discussions can commence in both chambers of Congress. In a recent op-ed, Milei emphasized that the IMF agreement would facilitate paying off debts to the BCRA and blamed Argentina’s high inflation on an excess money supply stemming from weakened central bank assets.

Economist Hernan Letcher from the Argentine Center for Economic Policy criticized the IMF deal on social media, asserting that it merely shifts the debt from the Argentine government to the IMF. Argentina faces one of the highest inflation rates globally, reported at 84.5 percent year-on-year in January; however, since Milei’s administration began, inflation rates have shown some decline, falling from 211.4 percent in 2023 to 117.8 percent in 2024.

In summary, President Javier Milei is seeking congressional support for an IMF loan agreement aimed at rectifying the financial situation of Argentina’s central bank and mitigating inflation. Despite past challenges with congressional support, Milei’s administration is moving forward amidst criticism from economic experts. With inflation still at high levels, the effectiveness of this deal remains a point of contention among analysts and policymakers.

Original Source: www.hurriyetdailynews.com