MercoPress. South Atlantic News Agency

Argentina's case before the IMF advancing rapidly

The IMF would not be so keen on letting the BCRA step in at will to keep doown the US dollar exchange rate

According to International Monetary Fund (IMF) sources, negotiations with Argentina are in an advanced stage after a meeting between the credit agency's board of directors and technical staff on Tuesday. Further details are expected to be announced at a press conference on Thursday by IMF Spokeswoman Julie Kozack.

“The Fund's technical staff is holding consultations with the Executive Board. Discussions on a new Fund-supported program are advanced and within the framework of our usual internal processes,” it was reported in Washington DC.

In Buenos Aires, President Javier Milei is under pressure to finalize the deal amid waning Central Bank (BCRA) reserves and a rising “blue” (a euphemism for “black market”) dollar,” nearing AR$ 1,300. The Argentine Congress recently approved a 10-year loan with a 4.5-year grace period and a 5.63% interest rate, but the government faces a tight timeline to secure an extended facilities agreement before the IMF Summit on April 21-22 in Washington.

Support for Argentina has come from key international players, including Presidents Donald Trump (US) and Emmanuel Macron (France). However, the IMF is feared to have a set of conditions in mind before granting any further disbursement, which might destabilize Milei's achievements curbing inflation by limiting BCRA interventions in the currency exchange market.

The Libertarian Government needs to stabilize markets and secure funds to address debt maturities between 2026 and 2029, totaling US$ 14.1 billion, though negotiations continue to define the loan’s exact terms and disbursement schedule.

Despite technical progress, Argentina still needs the green light from Germany and Japan, who are known to be more demanding than the United States and France.

But IMF fears regarding exchange rate interventions are believed to stand in the way, particularly given Economy Minister Luis Toto Caputo's role under then-President Mauricio Macri back in 2018. Hence, it foresees a mechanism whereby the BCRA would only be able to step in when the dollar pierces the floor or exceeds the expected ceiling, while letting it float “freely” within those limits, it was explained. In addition, caps and floors might be updated monthly, thus impacting inflation.

After further sales to keep the US dollar at bay, the BCRA's reserves were reported to stand Tuesday at US$ 26.441 billion.