The International Monetary Fund (IMF) has yielded to pressure from Javier Milei. After months of being accused of being a leftist and of having “bad intentions” by the far-right president, Chilean Rodrigo Valdés, director of the Western Hemisphere of the multilateral, has withdrawn this Thursday from the supervision of the negotiations with Argentina. The news, confirmed in Washington by Julie Kozack, director of Communications for the Fund, is a great success for Milei, who is eager to agree with the IMF on a disbursement of between 10 and 15 billion dollars to support his fiscal adjustment policy and lift the exchange restrictions that currently discourage the arrival of investments.
“To support ongoing constructive engagement with the Argentine authorities, Western Hemisphere Director Rodrigo Valdés has fully delegated the programme negotiations to Luis Cubeddu, Deputy Director of the Western Hemisphere Department, and Ashvin Ahuja, Head of Mission in Argentina,” Kozack said at a press conference. Cubeddu and Ahuja, who are in charge of day-to-day negotiations with the Casa Rosada, will now be supervised “directly by the Fund’s management”, namely Managing Director Kristalina Georgieva and her deputy, Gita Gopinath.
Argentina has had a program in force with the IMF since the beginning of 2022 that extends the payment terms of the $45 billion debt that the country had contracted four years earlier. This agreement provides for periodic disbursements from the IMF so that Argentina can honor its financial commitments in exchange for meeting fiscal and monetary goals. Unlike the adverse results of 2023, which Peronist President Alberto Fernández attributed to a record drought, Milei has exceeded all goals. In the first quarter of 2024, it achieved a fiscal surplus, stopped issuance and accumulated international reserves. It passed the Fund’s eighth review and received $800 million in exchange. The ninth review is currently in process.
The Argentine government, however, is seeking a new program that will allow it to access fresh dollars, as announced last June by the Minister of Economy, Luis Caputo. It is within the framework of this new negotiation that Milei began a harsh campaign of public attacks against Valdés, in office since May of last year, replacing Ilan Goldfajn.
For Milei, Valdés was “an accomplice” to the management of Alberto Fernandez and his Minister of Economy and presidential candidate, Sergio Massa. On several occasions, he said in television interviews that the director of the Fund had a “manifest bad intention” towards Argentina. “He does not want Argentina to do well. He has another agenda. We are over-compliant with everyone, but they preferred to support Massa’s disaster. Why did the IMF allow Massa to do everything? We over-comply with everything and they are always putting objections. He supported Massa’s entire disaster and he is doing to us what he did to us,” Milei had said.
The Argentine saw an ideological issue behind Valdés. He openly accused him of having “links to the São Paulo Forum,” a critic of neoliberalism, for having been Chile’s Minister of Economy between 2015 and 2017, during the presidency of socialist Michelle Bachelet. “Who knows why the IMF puts us in a São Paulo Forum there. We over-fulfilled everything and they are putting objections all day long. The IMF had a set of goals, we set stronger goals and over-fulfilled ours,” Milei had complained.
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