Washington (AFP) – The IMF and Argentina have begun negotiations over a new loan agreement as the current program draws to a close, a spokesperson for the international financial institution confirmed Thursday. “The authorities have formally expressed interest in moving to a new program, and negotiations are now underway,” the International Monetary Fund’s communications director, Julie Kozack, said during a press briefing at the Fund’s headquarters in Washington.
The IMF’s current 30-month loan agreement with the South American country expires on December 31, and is worth around $44 billion, making it the largest program it has. The program, which was signed by the previous government, has been adhered to by current President Javier Milei and his economy minister, Luis Caputo. Under Milei, Argentinian authorities have launched a vast austerity program aimed at slashing the public deficit and bringing down inflation, which had reached record levels.
On Thursday, Kozack praised “impressive results” achieved by Milei’s government, including a “sizable reduction in inflation, fiscal surpluses, and improved international reserve coverage.” Although the IMF expects Argentina to end the year with inflation at an annual rate of 229 percent, it has eased sharply over the course of the year, falling to a monthly rate of 2.7 percent in October, according to Argentinian authorities.
But this macro success has come at a steep cost: authorities devalued the Argentine peso by 52 percent last December, while more than 260,000 jobs in the private and public sectors were lost in just the first few months of Milei’s term. More than half the population now lives below the poverty line, according to official statistics, marking a sharp increase that Milei’s administration disputes.
The IMF estimates the Argentinian economy will contract by 3.9 percent this year, before bouncing back to grow by five percent in 2025.
© 2024 AFP
