Argentine President Javier Milei plans to use an Emergency Decree for a new IMF loan aimed at canceling National Treasury debt to the Central Bank, thus reducing the overall public debt. The agreement seeks to enhance the financial position of the Central Bank, assisting in disinflation and economic stability. Congressional approval is necessary for the decree’s enactment, although IMF support does not hinge on it.
President Javier Milei of Argentina intends to use an Emergency Decree (DNU) to secure approval for a new loan from the International Monetary Fund (IMF), as stated by the Casa Rosada on Thursday. According to legal requirements, congressional approval is necessary for each DNU to avoid being annulled. The purpose of the new agreement is to eliminate National Treasury debt owed to the Central Bank, thereby reducing total public debt and enhancing the Central Bank’s financial standing while also easing exchange stocks.
The Office of the President (OPRA) remarked, “The program will allow strengthening the Central Bank’s balance sheet, an essential milestone to consolidate stability and continue the disinflation process.” This agreement represents a public credit operation wherein the National Treasury will clear its existing debts with the Central Bank, consequently lowering the overall public debt.
The OPRAalso indicated that the new arrangement aims to fortify the Central Bank’s financial position, which is crucial for ensuring monetary and macroeconomic stability, thereby facilitating ongoing disinflation and the lifting of exchange restrictions. They emphasized the urgency of addressing the persistent inflation that has adversely affected the Argentine populace for years, urging Congress to respond swiftly, much like previous administrations.
“Turning the fight against inflation into a State policy is a clear sign that the representatives of the people have understood the mandate expressed at the ballot box,” OPRA added, expressing President Milei’s trust in the commitment of legislators towards the economic welfare of the citizens.
Economy Minister Luis Toto Caputo confirmed at a Mendoza business forum that this agreement is targeted for the first quarter of 2025 and alleviated concerns regarding devaluation, asserting that the IMF did not impose such conditions. He noted that the expected “fresh funds” would recapitalize the Central Bank without increasing the national debt, thereby fostering investment through lower taxes and enhanced competition.
IMF Spokeswoman Julie Kozack clarified that congressional approval is not a prerequisite for the IMF board to authorize the US$ 20 billion disbursement intended for debt obligations, though legislative consent would expedite the process.
In conclusion, President Javier Milei’s prospective Emergency Decree aims to secure a new IMF loan, focusing on eliminating debt and strengthening the Central Bank. The initiative seeks to address Argentina’s long-standing inflation issues while facilitating economic recovery and stability. The cooperation of Congress is emphasized as critical for expediting the approval process, while assurances are given regarding the absence of demands for devaluation. This agreement marks a significant step towards improving Argentina’s fiscal health and economic outlook.
Original Source: en.mercopress.com
