IMF confirms new loan talks with Argentina

The Argentine government has formally requested a new program with the International Monetary Fund (IMF), according to the lender’s spokeswoman Julie Kozack.

“The authorities have formally expressed interest in moving to a new program, and negotiations are now underway,” she said in a press conference on Friday in response to a question from Herald’s sister publication, Ámbito.

Kozack went on to clarify that the current Extended Fund Facility program is set to expire at the end of the year. Regarding its two remaining reviews, she explained that “it is not uncommon to let an existing arrangement expire without completing all of the reviews while they are considering moving to a new Fund-supported program.”

The Fund once again welcomed President Javier Milei’s measures. Kozack said that the Argentine government has “continued to implement their economic stabilization program, and it has achieved impressive results,” including a “sizable reduction in inflation, fiscal surpluses, and improved international reserve coverage.”

Kozack also highlighted both economic activity recovery and wages’ purchasing power are “firmly underway,” with growth turning positive in the last quarter of the year. She ratified that the multilateral organization’s technical teams would continue to work “constructively” with the government.

When asked about Argentina’s lack of a 2025 Budget approved by Congress, Kozack said this is not a problem and highlighted that the government continues to “implement their fiscal program with determination and effectiveness, and the recent data in November suggest that they have a primary surplus of around 2% of the GDP.”

As usual, when a new agreement is being negotiated, she did not provide any details of the “policies and the potential size of the program,” adding that they are part of the “discussions that are underway.” This conference is the Fund’s last of the year as the organization enters a holiday vacation period.

Milei counts on Trump’s support

On Wednesday, Milei said he expects Donald Trump’s administration to help Argentina negotiate a new agreement with the IMF. According to The Wall Street Journal, the Argentine president expects the Republican leader to help the country get “billions of dollars” in new financing from the multilateral organization.

On his relationship with Trump, Milei also said that he hopes to reach a free trade agreement soon. “I think it’s highly likely because the United States discovered that we’re a trustworthy partner,” said the Argentine head of state.

The future U.S. president has repeatedly shown ideological and personal affinity with his Argentine counterpart. Leveraging Trump’s remarks, Milei seeks to close a new agreement with the IMF that will bring fresh funds to the country, pointing to eliminating exchange controls as one of his most important objectives for 2025.

The libertarian administration’s confidence in the IMF’s role when Trump takes office is growing daily. On Tuesday, Economy Minister Luis Caputo said that he foresees the agreement will be renewed in the first months of next year.

“I estimate that for the first four-month period of next year, we will reach a new agreement,” he said, adding that IMF officials are “amazed” with the performance of the economic plan in Argentina, “just like in the whole world.”

Caputo reiterated that the government seeks to achieve three conditions to lift the exchange restrictions, collectively known as cepo (Spanish for clamp).

“The first is that inflation converges to the crawling peg level [devaluation rate, now at 2% per month.] The second is to finish balancing the money market, the demand and supply of pesos. This is extremely important because there was a total imbalance when we arrived — who wanted pesos in December last year?” he said, adding the new IMF agreement as the third prerequisite.

“If these three goals are met, we will probably be in a position to get out of the cepo.”

Source: Buenos Aires Herald

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