International Monetary Fund gives $4.7 billion grant to Miley’s Argentina

The government of Javier Milie and the International Monetary Fund have announced a new agreement for Argentina to continue paying its $44,000 million debt with the multilateral organization. In its first visit to the far-right government of Miley, which ended this Wednesday after almost a week of meetings, the IMF mission reached a technical agreement with the government to deliver a new disbursement of $4.7 billion, to be supported Needed That will depend on the “consistent and sustainable implementation” of fiscal adjustments announced by its board and by the new Argentine government in mid-December. The money is not a new loan, but matches disbursements the fund had scheduled with Argentina between December last year and the first quarter of 2024. The country will use the disbursement to pay off its own debt with the organization.

The IMF said in a statement that “the new government has already embarked on a major initial fiscal consolidation, taking action to rebuild its reserves, correcting relative price imbalances, strengthening the Central Bank’s balance sheet, and building a system based on “Implementing an ambitious stabilization plan.” Simple, rule-based and market-oriented.” “This is not a new agreement,” Miley’s Economy Minister Luis Caputo said at a news conference in Buenos Aires on Wednesday night. “The previous agreement, which was closed due to non-compliance with the targets, has been revived,” explained Caputo, who has not closed the door to requesting more financing from the multilateral organization. “If you want to reach a new agreement and ultimately request new funds, the Monetary Fund is open to that possibility,” the minister said.

The Argentine government has been warning for days that the payment plan that Peronism signed with the fund in January 2022 to comply with a $44,000 million loan assumed by the government of conservative Mauricio Macri in 2018 could lead to failure. The reason was “virtually fell”. Meet fiscal adjustment and reserve accumulation targets. Although formally it was not so. Miley, who claimed during the campaign that his cuts plan was “even tougher” than the IMF had expected, was confident he would have no problems with the organization.

The Fund was with them: when the new Argentine government announced its first rate hike, the removal of energy and transport subsidies, and a 50% devaluation, the organization celebrated “strong initial action” leading to a “remarkable improvement in finances”. public in a way that protects the most vulnerable in society and strengthens the exchange rate regime.” This Wednesday, before announcing the new technical agreement, the Fund published a statement warning that “new The Administration inherited an exceptionally challenging economic and social situation, with rising macroeconomic imbalances reflecting largely inconsistent and expansionary policies, particularly during the last quarter of the year.

This January 28 marks two years since the Peronist government of Alberto Fernández and the IMF agreed a new payment plan for the original 2018 loan. The path was tortuous, with six revisions to that plan between January 2022 and July 2023, when the Peronist government last met with the international organization. With currency reserves in the historic red, Argentina finished paying off its maturities with other debts and with the yuan lent by China due to future benefits, the refinancing agreement secured the majority sector of the government led by Fernández and the Vice President. Started war between. Christina Kirchner and Peronism bid farewell to the IMF on August 13, on the eve of the presidential primaries.

The Fund then acknowledged that Argentina had not met its objectives of reducing public spending and accumulating reserves due to sinking agricultural exports due to drought and the government’s “political distractions”, but agreed to disburse $7.5 billion. , which Argentina will use to make the payment. Its debt, and the last meeting with that government ended with a promise of a payment schedule by the end of 2022 and a new meeting to review objectives in November last year. The Peronist Economy Minister, Sergio Massa, had managed to get the IMF off his back while facing the presidential campaign as a candidate. But he lost to Miley, and the review agreed for the end of last year remained up in the air until this week.

The fund’s mission arrived in Argentina last Friday to inaugurate the Miley era and meetings with the new Argentinian authorities were kept completely secret. IMF representatives met last Friday with the ministries’ technical teams and this Monday with the Economy Minister, Luis Caputo, and the Chief of Staff, Nicolas Posey. According to the government, the agenda was not predetermined, and the possibility of claiming new money was rejected by the head of the Treasury Palace.

The fund expects Argentina to end this year with net reserves and fiscal surplus of $10 billion. During the announcement of the Government, Minister Caputo assigned the objectives of the issue that has been the focal point of Argentine politics in these weeks: his State Reform Bill, which began discussion in Congress this Tuesday, and with 300 reforms. The mandate of necessity and urgency includes privatization of public companies, labor market flexibility and deregulation of health insurance. “The President is on the right track and has great courage to take measures Shock Given the urgency and need for change. It is clear that the society supports it. The question is whether politicians will rise to the occasion,” Caputo said of lawmakers who would have to vote on the measure in Congress. “To the extent that the law is not passed, measures will become more stringent,” he warned.

With Miley, a new phase opens in Argentina’s relations with the Fund, a more conservative and pro-market phase. Miley’s rapprochement with the IMF strengthens the far-right’s alliance with the United States. For Miley, such a situation also means distancing itself from countries it considers “communist”, such as Brazil or China, its two main trading partners. The far-right has formally renounced the country’s membership in BRICS, the economic alliance made up of Brazil, Russia, India, China and South Africa, which Argentina joined in August. This decision reduced the financing options available to the Argentine government, which has committed to making its economic adjustment plan effective enough to rely entirely on the Fund.

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