Economy Minister Luis Caputo refutes claims that the IMF has requested devaluation of Argentina’s currency. The government is pursuing a new financing agreement with the IMF, aiming for completion in the next two months. Congressional approval remains critical, as the administration seeks fresh funds to stabilize the economy and reduce inflation without increasing gross debt.
On Thursday, Argentine Economy Minister Luis Caputo clarified that the International Monetary Fund (IMF) has not mandated a devaluation of the nation’s currency as part of a prospective financing agreement. In a radio interview, he emphasized that while dollar prices are notably high, devaluation is not a viable solution. Instead, Caputo suggested that a reduction in prices can be achieved through lowering taxes and fostering competition in the market.
President Javier Milei’s administration is actively pursuing a new loan agreement with the IMF, targeting completion within the next two months. In correspondence, Milei’s office noted that a decree would be presented to Congress to galvanize legislative support for the anticipated agreement. This proposed deal aims to facilitate a public credit operation where the National Treasury will repay existing debts to the Central Bank.
Manuel Adorni, the Presidential Spokesperson, indicated that the agreement, which builds on a record US$44 billion loan from 2018, is expected to finalize within the initial four months of the year. He asserted, “When there are details we will give them to you.” Caputo further assures that most aspects of Argentina’s economic strategy have already been settled with the IMF officials, attributing any delays to possible congressional actions or bureaucratic processes from the lender.
Cabinet Chief Guillermo Francos highlighted that congressional approval is essential for advancing the deal. He remarked that the likelihood of securing approval through a decree was unrealistic, as the IMF requires legal certainty. There is ongoing discourse between the IMF and Argentine officials with regard to the specifics of the new financing program, but the government has not disclosed the exact funding amount sought.
Historically, Argentina’s prior agreements have complicated the current financial landscape. The initial program, valued at US$57 billion, was agreed upon in 2018 under former President Mauricio Macri and later faced challenges under Alberto Fernández’s administration. This new deal aims to refinance outstanding debts from prior financing received.
While IMF representatives maintain a cautious stance regarding newly proposed legislation, they acknowledged the constructive nature of continued negotiations. Spokeswoman Julie Kozack noted that broad political backing would be beneficial for the program’s implementation but clarified that it was not a prerequisite from the IMF’s standpoint. The Argentine government anticipates obtaining fresh funding to support the Central Bank without increasing gross debt.
With multiple reports hinting that Argentina may seek between US$10 billion and US$20 billion, it remains unclear the exact amount needed to support the government’s initiatives. While UBS speculated on a package containing US$8 billion, others suggested that funds will primarily go towards servicing existing debt obligations during Milei’s tenure. The administration has yet to provide a timeline for the removal of stringent currency controls, although Milei has committed to abolishing these restrictions by next year’s start.
Economy Minister Caputo expressed optimism regarding a successful agreement within the first quarter of the year, stating that negotiations are nearing completion. As the situation evolves, IMF officials have acknowledged the administration’s measures contributing to economic stabilization and growth, with indications that poverty levels in Argentina are beginning to decline, alongside reductions in inflation rates.
In conclusion, Argentina’s Economy Minister Luis Caputo has denied IMF demands for currency devaluation, emphasizing alternative solutions for price reductions. As President Javier Milei’s government seeks a new financing deal, legislative support and negotiations with the IMF are crucial. Despite past difficulties, the current administration aims to stabilize the economy, with expectations of new funding and legislative backing for the proposed agreements. The focus remains on enhancing the Central Bank’s dollar reserves and fostering competition in the domestic market.
Original Source: www.batimes.com.ar
