Yesterday, the IMF and Argentina reached an agreement on a short-term program that will last until May, by which $4.7 billion will be disbursed, pending approval by the Fund’s executive board. This is not a “new” program, but one that puts the $45 billion Extended Fund Facility (EFF) renegotiated by former Finance Minister Sergio Massa “back on track” with the savage austerity President Javier Milei and Finance Minister Luis Caputo have announced. The previous Alberto Fernández government “failed” in meeting the program’s austerity targets, as the IMF repeatedly states. The $4.7 billion includes a $3.3 billion tranche of a loan that was to have been disbursed in November, but was delayed, and $1.4 billion that is being disbursed ahead of schedule.
The Fund fully supports the austerity parameters announced by Caputo on Dec. 12 and later elaborated in the “Urgency and Necessity” decree (DNU) and Omnibus bill, which deregulate the economy and eliminate the role of the state. In the statement released following yesterday’s meeting between Fund staff and Caputo and presidential chief of staff Nicolas Posse, the IMF states: “President Javier Milei and his economic team moved quickly and decisively to develop and begin to implement a strong policy package to restore macroeconomic stability and are fully determined to bring the current program back on track…. The authorities are building social and political support for their stabilization plan…. An Emergency Decree has been issued and an Omnibus bill has been submitted to congress to support the authorities’ stability and growth plans…. Although the path to stability will be a challenging one, with conditions worsening before they get better, initial actions were successful in avoiding an intensification of the crisis.”
