Argentina Unlocks $4.7B From the International Monetary Fund

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Facts

• Argentina on Wednesday secured $4.7B from the International Monetary Fund (IMF) as new President Javier Milei looks to revive an economy that is grappling with 160% annual inflation and a 40% poverty rate.¹
• After a week of negotiations, Milei's government unlocked the money as part of an agreement to pay down the $44B it owes the IMF. The $4.7B is not a new loan but is rather part of pending disbursements from a previous deal between the two parties. The government will use the money to help pay its debt.²
• Milei’s deal secures more than the expected $3.3B tranche of a loan that was slated to be disbursed. In addition to the $3.3B, the IMF advanced the remainder as part of the debt pay-down plan.³
• The payment also buys Milei's libertarian government more time to decide whether to continue Argentina's debt repayment program brokered by his predecessor or negotiate a new deal. The IMF first provided a $44B bailout in 2018, which was replaced in 2022 after the government failed to comply with the IMF's terms.⁴
• Argentina will be able to access the funds after the IMF Executive Board reviews the agreement. The IMF said that Milei's ambitious stabilization plan will help Argentina meet the targets and bring the current program back on track after the previous administration's alleged 'policy setbacks.'⁵
• The program's goals include reaching a primary surplus of 2% of gross domestic product in 2024 and increasing international reserves by $10B. Economy Minister Luis Caputo said that the current program will be reviewed again in April.⁶

Sources: ¹Al Jazeera, ²EL PAÍS English, ³Buenos Aires Times, ⁴Yahoo Finance, ⁵IMF and ⁶LatinFinance.

Narratives

• Right narrative, as provided by The Rio Times. Pres. Javier Milei is doing all he can to fix the utter economic disaster left by his leftist predecessor, and his agreement to secure $4.7B from the IMF shows that he has institutional backing. This agreement does not add any more debt to Argentina's balance sheet, but it does grant Milei's government flexibility to determine how it will pay down the money it owes the IMF. The road was never going to be easy, but Milei's ambitious economic plan is already restoring Argentina's legitimacy. Economic recovery will take time, but Milei’s free-market approach will yield great dividends in the future.
• Left narrative, as provided by US News & World Report. While many Argentinian people may have agreed with Milei's brash rhetoric and hardline approach to economics, the honeymoon phase is wearing off quickly as markets react to his administration's extreme policies. After a month, Argentina's inflation continues to skyrocket, and he has no defined plans to pay off the country's massive debt. Milei is trying to buy time by securing IMF payments, but that won’t fix Argentina's economic crisis — especially with such severe austerity.

Predictions