President Javier Milei seeks congressional approval for an IMF loan to stabilize Argentina’s central bank and control inflation. The decree stipulates repayment conditions and aims to use the funds to address central bank obligations. Despite criticism regarding the deal’s implications, inflation rates have shown some decline since Milei’s administration took office.
Argentine President Javier Milei has solicited congressional approval for a loan agreement with the International Monetary Fund (IMF), asserting that it will stabilize the central bank and reduce inflation. The agreement, as delineated in a decree released at midnight, outlines loan repayments over ten years with an initial grace period of four and a half years.
The amount involved remains unspecified, but it constitutes part of the IMF’s Extended Fund Facility (EFF) program. This loan is in addition to the $44 billion that Argentina currently owes to the IMF. Funds from the new agreement are intended to settle treasury bills held by the central bank (BCRA) and fulfill obligations under the EFF program.
A 2021 law necessitates that the president gain authorizations from both congressional chambers for IMF agreements; however, only one chamber’s approval is required for the deal to take effect. Despite being part of a minority in parliament, Milei’s party previously navigated this process successfully for two contentious decrees last year.
A bicameral congressional committee has ten working days to review the decree before discussions can commence in both legislative chambers. In a recent op-ed for La Nacion, Milei remarked that the IMF agreement would facilitate debt repayment to the BCRA, attributing Argentina’s high inflation to an excess money supply and dwindling assets in the central bank.
Economist Hernan Letcher has criticized the agreement via X, noting it merely shifts the creditor from the state to the IMF. As of January, Argentina faces one of the highest inflation rates globally at 84.5 percent year-on-year. However, there has been a decrease since Milei’s administration commenced, with inflation rates dropping from 211.4 percent in 2023 to 117.8 percent in 2024, reflecting a commitment to slashing governmental expenses and rectifying public debt.
In summary, President Javier Milei has initiated a request for congressional endorsement of a new loan agreement with the IMF, aimed at addressing Argentina’s inflation concerns and stabilizing its central bank. While this strategy may provide short-term relief, criticism arises regarding its long-term implications. The government is under pressure to navigate legislative procedures effectively to secure financial support as it faces a significant inflation challenge.
Original Source: www.hurriyetdailynews.com
