Argentina to reach IMF staff agreement as early as this week

Argentina is expected to reach a staff-level agreement with the International Monetary Fund on the second review of its US$20-billion programme as early as this week, according to people familiar with the matter. 

The agreement would follow a review that has dragged on for months, after IMF staff visited Buenos Aires in early February. Economy Minister Luis Caputo arrives in Washington this week for the IMF’s spring meetings, marking roughly the one-year anniversary since President Javier Milei’s government began the programme.

If approved by the IMF’s executive board, Argentina would receive a US$1-billion disbursement. The country begins principal repayments in September from its prior agreement with the lender.

The IMF press office and Argentina’s Economy Ministry didn’t immediately comment after business hours Monday. 

A key issue throughout this program and previous ones has been Argentina’s difficulty to accumulate foreign reserves at the Central Bank, a core requirement. Shortly after the programme started, Milei’s government had to request a waiver for not meeting the IMF program target for accumulating reserves, an issue foreign investors are closely watching. 

For now, Milei has chosen not to return to international markets, meaning his government often draws down on Central Bank reserves when it needs to repay a multilateral institution or sovereign bonds. The monetary authority started buying reserves on a daily basis in January and it’s picking up the pace significantly in recent days amid Argentina’s crop harvest, a key influx of hard currency. The open question is whether it can not just buy, but also accumulate, reserves while the government delays a return to markets.