Argentina's Frontrunner Milei Hold Talks With IMF

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Facts

  • Argentina's anti-establishment presidential candidate Javier Milei, who emerged as the biggest winner in national primaries last week, met virtually with International Monetary Fund (IMF) officials on Friday to lay out his economic proposals.1
  • He reportedly outlined his plans, including for fiscal deficit reduction, opening up the economy, and introducing a monetary reform to eventually scrap the central bank. He also pitched different models of dollarization.2
  • Discussions with the multilateral lender also touched on Argentina's $44B loan program, with the IMF explaining the nature of the agreement and its expiry date while Milei assured that he wouldn't default to the Fund or the sovereign debt.3
  • This comes as economic advisers of the other opposition contender Patricia Bullrich met IMF officials this week, and Economy Minister and presidential candidate Sergio Massa is expected to travel next week to the US for talks with the IMF regarding the upcoming disbursement of some $8B.4
  • Argentina, where almost 40% of the population is impoverished, has long been in economic turmoil, heading to its sixth recession in a decade amid triple-digit inflation and an ever-weakening currency.5
  • The self-described "anarcho-capitalist" will contest against Bullrich and Massa in October. If no candidate secures at least 45% of the vote or 40% plus a 10-point lead over the closest rival, the top two candidates will face off in November.6

Sources: 1Associated Press, 2Reuters, 3Buenos Aires Times, 4MercoPress, 5Bloomberg, and 6Al Jazeera.

Narratives

  • Narrative A, as provided by Reason. Classical liberalism was the intellectual foundation of Argentina's golden age when Buenos Aires used to rival New York and Paris. Yet, these ideas have been absent from Argentine politics during the disastrous decades-long Peronist era. If the country is to become a world power ever again, the safest bet is, as Milei advocates, to return to its tradition of liberty.
  • Narrative B, as provided by Compact. While it's not hard to understand how the eccentric Javier Milei has emerged as Argentina's presidential frontrunner, given the widespread discontent with politics in a country that faces catastrophic inflation, the fact is that his silver bullet to deal with the nation's chronic economic troubles is an unfeasible agenda. As no one really knows how to solve its economic woes, it remains wise to bet against Argentina.

Predictions