Economy Minister Luis Caputo denied IMF demands for currency devaluation in securing a financing deal. President Milei’s administration seeks a loan agreement within two months to address existing debts. The IMF describes negotiations as constructive, emphasizing the importance of congressional support for the deal.
On Thursday, Economy Minister Luis Caputo refuted claims that the International Monetary Fund (IMF) has mandated Argentina to devalue its currency for a new financing agreement. During a radio interview, Caputo asserted, “Devaluation is not the solution,” highlighting that inflation could be addressed through reduced taxes and enhanced competition instead. President Javier Milei aims to establish a new loan arrangement with the IMF within the next two months.
Milei’s office has signaled intent to submit a decree to Congress for support of the agreement, which will facilitate a public credit operation to address existing debt with the Central Bank. This proposed arrangement aims to build on the previous $44 billion loan granted in 2018, with Presidential Spokesperson Manuel Adorni noting that finalization of the deal is anticipated during the initial four months of the year.
Caputo expressed optimism regarding the agreement’s timeline and confirmed that most components of Argentina’s economic program have been pre-agreed with IMF officials. Any potential delays would likely arise from either congressional approvals or bureaucratic processes at the IMF, according to Caputo. Adorni clarified that the agreement’s implementation would not increase national debt, even as it would require congressional consultation to assess its viability.
Chief Cabinet Minister Guillermo Francos emphasized the necessity of congressional approval, stating that the likelihood of obtaining such approval via decree is low since the IMF mandates legal certainty. Recent discussions have highlighted that both parties are negotiating a new financing program, although the specific funding request figure remains undisclosed.
Argentina previously entered into a $57 billion program with the IMF in 2018, which faltered at the end of 2024 due to deteriorating relations. A new agreement would aim to refinance existing obligations from the previous loan term. The IMF remains cautiously optimistic about the legislative backing for the proposed agreement, emphasizing that support from Congress is beneficial but not mandatory.
Despite media speculation about the amount of funding Argentina seeks, ranging from $10 to $20 billion, Caputo has maintained that the planned endeavor includes fresh funds targeting the recapitalization of the Central Bank’s assets without raising gross debt. The market anticipates that a substantial portion of any new package would be accessible by 2025.
Milei, known for his controversial austerity policies aimed at curbing inflation, seeks the funds to strengthen the Central Bank’s dollar reserves. While specific timelines for lifting strict currency controls—locally known as ‘cepo’—remain unclear, Milei has indicated a goal to eliminate these restrictions by next year. Adorni remarked that such controls would be removed once favorable conditions are established.
In recent discussions, IMF officials praised Milei’s administration for achieving tangible progress in economic stabilization, stating, “The authorities’ stabilization and growth plan is yielding significant results.” They noted a reduction in poverty and the declining inflation rate, with January showing a modest increase in consumer prices, the lowest in years.
In conclusion, Economy Minister Luis Caputo has denied that the IMF has required Argentina to devalue its currency as a condition for a new financing agreement. The government, led by President Javier Milei, is targeting a resolution within a few months, while emphasizing the importance of maintaining legal certainty and gaining congressional approval. The negotiation process remains constructive, focusing on addressing existing debts without increasing national debt, and the outcomes are seen as crucial for Argentina’s economic stabilization.
Original Source: www.batimes.com.ar
