President Javier Milei says that a new agreement with the IMF will clean up the accounts of the country's Central Bank and wipe out inflation.
In an op-ed published Saturday in theLa Nación daily, the head of state said the impending deal would allow the government to pay off its debts to the bank.
The president blames Argentina's persistently high inflation rate on an excess money supply partly caused by the deterioration of Central Bank (BCRA) assets.
"Thus, the money received from the IMF will be used by the Treasury to cancel part of its debt with the Central Bank," he wrote.
"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," he added.
The day before Milei's article appeared, Economy Minister Luis Caputo again said a new finance programme had been agreed between Argentina and IMF staff. He described its need as "urgent."
"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," Caputo said in an interview with the LN+ channel.
The deal must now go to the executive board of the IMF, which is the world's lender of last resort and plays a stabilising function in the world economy.
On Thursday, an IMF spokeswoman had confirmed that negotiations with Argentina "continue constructively" but remain under discussion.
Argentina is hoping to conclude the deal in the first quarter of the year, and local media reports estimate it will represent a loan of around US$10 billion. Wall Street analysts say it could be as high as US$20 billion.
IMF spokeswoman Julie Kozack said on Thursday that "broad political and social support" could "improve the implementation of the programme" but is not a requirement of the Fund.
Last Thursday, Milei said the government would send a decree to Congress – and not a bill – to obtain support for a future deal.
"If there is one thing we can justify, it is that this agreement is of necessity and urgency," Caputo said, arguing that a debate in both chambers would delay the programme. "We can't go round in circles,’ he added, assuring that the IMF "is not asking for a devaluation” of the peso.
Argentina has one of the highest inflation levels in the world, amounting in January to 84.5 percent year-on-year.
But since Milei took office promising to cut spending and address government debt, price rises have slowed, with inflation dropping from 211.4 percent in 2023 to 117.8 percent in 2024.
– TIMES/AFP
