BUENOS AIRES.- Argentina is negotiating a new agreement with the International Monetary Fund (IMF)as revealed by the Minister of Economy Luis Caputo about the conversations with the multilateral organization, which has shown its approval for the austerity measures implemented by the government of Javier Milei.
“We have a very direct dialogue. They have put on the shelf the possibility of a new agreement. They are open to exploring that,” said the Minister of Economy, Luis Caputo, in an interview with the Todo Noticias channel in Buenos Aires. “We also study alternatives. “We spoke with them about the possibility of a new agreement, to see if there is something better we can do for the Argentines,” said the official, who did not provide further details.
The announcement occurs in the context of the visit of the number two of the credit organization, Gita Coinath, to the Argentine capital to meet with Caputo and President Milei about the progress of the refinancing program of the $44 billion agreement granted to the South American country in 2018.
“Pleased by the visit to Buenos Aires. “We had a productive discussion with Minister Caputo… about efforts to stabilize the economy and protect the vulnerable in Argentina,” said the IMF deputy managing director on social network X.
The IMF did not officially rule on the possibility of a new credit program for Argentina.
Caputo highlighted that the IMF is satisfied with the economic course that Argentina took after Milei’s inauguration on December 10. The president devalued the Argentine peso by more than 50% and launched a plan for adjustment and deregulation of the economy.
The measures include cuts in public spending to reduce the fiscal deficit, thousands of layoffs in the public administration and the reduction of subsidies to public transport and the energy sector.
“It’s more than they would have imagined, would have asked for,” Caputo said. “The results are drawing their attention strongly,” he said.
As a sign of its approval, the IMF transferred 4.7 billion dollars at the end of January so that it could meet its debt commitments without affecting the level of reserves of the Central Bank.
Fiscal surplus
Last January, the Argentine government announced that the country reached a monthly fiscal surplus for the first time in almost 12 years, in the midst of strong spending cut measures. Argentina maintains a credit agreement for 44 billion dollars with the IMF and zero fiscal deficit is one of the main goals of Milei’s management.
In the first month of Milei’s management, the surplus was about 589 million dollars at the official exchange rate, the product of greater income than expenses. The figure included the payment of interest on the public debt.
It is the “first (monthly) financial surplus since August 2012 and the first financial surplus in a month of January since 2011,” indicated the Ministry of Economy.
Caputo published in X that “zero deficit is not negotiated.”
The Milei government committed to the IMF to achieve balance in public finances this year.
However, Milei’s economic measures have two sides. Although the government managed to bring the deficit to zero in its first month, inflation in January reached 20.6% and the annualized inflation at the end of last month was 254.2%.
The 50% devaluation of the Argentine peso, the liberalization of prices and the elimination of subsidies in public service rates were the cause of this increase.
Furthermore, according to the Social Debt Observatory of the Argentine Catholic University (UCA), poverty in January exceeded 57%, the worst index since the 2001-2002 crisis.
Source: With information from AP / Profile / BBC World
