(Picture: Chris Ratcliffe)
Economy Minister Announces Agreement in Principle to Strengthen Reserves
Argentina’s Economy Minister, Luis Caputo, announced this Thursday that the country is on the verge of finalizing a new agreement with the International Monetary Fund (IMF) for a loan of $20 billion (approximately 123 billion Argentine pesos). According to Caputo, the financing amount has been agreed upon with the fund but is still pending approval, at a time when the country is facing significant exchange rate pressure.
Aim to Bolster Central Bank Reserves
In addition to the IMF credit, the Argentine minister also announced that the government is negotiating an “additional package” with other organizations, such as the World Bank and the Inter-American Development Bank (IDB), to strengthen its reserves amid pressure on the Argentine peso. This pressure resulted in a loss of over $1.2 billion (approximately 7 billion Argentine pesos) in international reserves in the last week.
According to Caputo, the funds “will not be for financing expenses but to recapitalize the Central Bank’s assets” and “end the stress on the dollar in Argentina.”
“When you look at the gross reserves and add what is coming (from the IMF), those reserves will rise to around $50 billion,” he said.
IMF Deal Contingent on Reforms
Argentine President Javier Milei had already authorized negotiations with the IMF through a decree signed two weeks ago. Argentina currently has a debt of over $40 billion with the organization.
The new agreement with the IMF, with a ten-year repayment term, is expected to enable a flow of financial assistance to the country. In return, Argentina will need to invest in structural reforms and measures to stabilize the economy.
Economic Context: Inflation and Fiscal Surplus
The devaluation of the peso and its potential effects on prices represent a risk for President Milei, who has made controlling inflation one of his main priorities. Since taking office, inflation has fallen from 211% in 2023 to 118% last year.
The country recorded a fiscal surplus of 1billioninFebruary,achievingits13thmonthlysurplussinceMileiarrivedattheCasaRosada.TheOrganizationforEconomicCooperationandDevelopment(OECD)releasedarankinglastweekontheannualgrowthforecastforcountriesin2025,withArgentinaoccupyingthesecondpositiononthelist,behindonlyIndia.
Resumo em Español:
El ministro de Economía de Argentina, Luis Caputo, informó sobre la negociación de un préstamo de US$ 20 mil millones con el Fondo Monetario Internacional (FMI) para fortalecer las reservas del Banco Central ante la fuerte presión cambiaria sobre el peso, que provocó la pérdida de más de US$ 1.2 mil millones en la última semana. Argentina también busca financiamiento adicional del Banco Mundial y el BID. El acuerdo con el FMI, con un plazo de pago de diez años, exigirá reformas estructurales. En el contexto económico, se destaca la disminución de la inflación bajo el gobierno de Milei y el reciente superávit fiscal, así como la previsión de crecimiento de la OCDE para 2025.
Resumo em Português:
O ministro da Economia da Argentina, Luis Caputo, anunciou que o país está prestes a fechar um novo acordo com o Fundo Monetário Internacional (FMI) para um empréstimo de US$ 20 bilhões. O objetivo é recapitalizar o Banco Central e aliviar a pressão cambial sobre o peso, que causou uma perda de mais de US$ 1,2 bilhão em reservas na última semana. A Argentina também negocia fundos adicionais com o Banco Mundial e o BID. O acordo com o FMI, com prazo de dez anos, exigirá reformas estruturais. A inflação diminuiu sob a presidência de Milei, e o país registrou um superávit fiscal em fevereiro. A OCDE prevê um crescimento significativo para a Argentina em 2025.
