President Javier Milei of Argentina seeks congressional approval for an IMF loan intended to address inflation and stabilize the central bank. The deal specifies a ten-year repayment plan with an initial grace period. Although critics express doubts, efforts are underway to secure necessary legislative backing amid Argentina’s persistently high inflation rates.
In Buenos Aires, President Javier Milei has formally requested congressional approval of a loan agreement with the International Monetary Fund (IMF). He asserts that this agreement aims to stabilize Argentina’s central bank and mitigate inflation. The agreement entails repayment of the loan principal over a decade, with an initial grace period of four and a half years, as stated in a recently published decree.
The funds, specific amounts undisclosed, are part of the IMF’s Extended Fund Facility (EFF) and are in addition to the existing $44 billion debt owed by Argentina to the IMF. These borrowed funds are earmarked for settling treasury bills held by the central bank and fulfilling obligations under the EFF framework, according to the decree.
A 2021 law mandates that the President secure authorization from both congressional chambers to finalize agreements with the IMF; however, support from just one chamber is sufficient for enactment. Although Milei’s party holds a minority in parliament, it successfully navigated this process last year to pass controversial measures impacting retiree funds and university financing.
A bicameral congressional committee is required to respond to the decree within ten working days, after which discussions can commence in both chambers. In a recent op-ed for La Nacion, Milei expressed that the IMF agreement is crucial for discharging debts owed to the central bank. He attributes Argentina’s alarming inflation levels to an excessive money supply, partly linked to devaluation of central bank assets.
Milei aims for the IMF agreement to help restore the central bank’s assets, positing that it will enable inflation to become merely a relic of the past. In contrast, Economist Hernan Letcher has criticized the deal, suggesting it merely shifts the creditor from the state to the IMF. Currently, Argentina experiences one of the highest inflation rates globally, reported at 84.5 percent year-on-year in January, although Milei’s initiatives have led to a reduction in inflation rates from 211.4 percent in 2023 to 117.8 percent in 2024.
President Javier Milei’s request for congressional approval of an IMF loan agreement underscores his administration’s commitment to managing Argentina’s economic challenges, particularly its high inflation rate. With legislative processes underway, the focus is on stabilizing the central bank’s finances and curtailing inflation, despite critical perspectives on the nature of the deal, indicative of the complexities surrounding Argentina’s economic framework.
Original Source: www.hurriyetdailynews.com
