Argentina’s Economy Minister, Luis Caputo, said this Tuesday (11) that he will negotiate a new program with the International Monetary Fund (IMF) after the eighth review of the US$44 billion rescue plan that the organization granted to the country.
“We are in the process of reviewing the Fund, which will take place on the 13th [de junho]and from then on we will start negotiating a new program”, announced Caputo during his speech at the conference of a libertarian ideology foundation in Buenos Aires.
Next Thursday (13), the IMF board will meet with the Argentine government to discuss the eighth review of the agreement, which the country had signed in 2022 during the term of then president Alberto Fernández (2019-2023) to refinance the debt of US$45 billion contracted in 2018 with the organization itself during the government of his predecessor in the presidency, Mauricio Macri (2015-2019).
The agreement includes quarterly reviews of the level of compliance with fiscal discipline targets, accumulation of monetary reserves and limits on monetary issuance.
Other disbursements, which the country uses to pay its debt with the IMF, which was US$40.8 billion at the end of 2023, depend on the institution’s approval.
For its part, the IMF had noted in a statement in May that Argentina reached this review with a “stabilization plan” in which it managed to achieve “the first quarterly fiscal surplus in 16 years”, a “rapid fall in inflation” and “a strong reduction in sovereign risk”.
“There are four conditions to get out of fiscal tightness: fiscal balance, solution of legacy dollar demand stocks, flows. And the fourth is that there is a reasonable relationship between reserves in the BCRA [Banco Central] and interest-bearing liabilities. We’re not there yet,” Caputo added.
However, at the economic level, the country is under exchange rate tensions and some uncertainties due to the fact that the Senate will deal this Wednesday (12) with the Basic Law of President Javier Milei’s government, which is a large package of financial and taxes.
While the indicator that reflects investors’ perception of the likelihood of Argentina not meeting its financial obligations rose to 1,511 points, the parallel dollar reached 1,300 pesos per unit. Given this situation, Caputo admitted that “there may certainly be a little more volatility”, but there will be no “economic squeeze”.
Regarding the draft Law on Bases and Starting Points for the Freedom of Argentines, the Minister of Finance considered that it is an accelerator of the economic situation, but will not alter the country’s recovery.
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