IMF clears Argentina's latest review, frees US$1 billion in funds

The International Monetary Fund’s executive board has approved the latest quarterly review of Argentina’s US$20-billion agreement, unlocking the release of US$1 billion in fresh funds.

In a statement issued last month, the IMF confirmed that it had reached a staff-level agreement with President Javier Milei’s government on the second review of the country’s 48-month Extended Fund Facility (EFF) programme.

The new tranche – the third under the programme approved in April 2025 – still required formal sign-off from the IMF Executive Board, which was granted Thursday.

With the latest US$1-billion disbursement, Argentina will have received US$15.8 billion of the US$20 billion outlined in the agreement.

The country is due to begin principal repayments in September under its previous arrangement with the lender.

In its statement, the IMF described the review as a “milestone” and noted that the programme could ultimately amount to around US$21 billion, rather than the US$20 billion initially announced.

“Despite a more complex global and domestic environment, the Executive Board assessed that programme implementation has remained solid, reflecting appropriately prudent policies and economic policy adjustments,” the Fund said.

Argentina failed to meet one of the agreed targets relating to the accumulation of net international reserves, though “most key performance criteria and indicative targets were met,” the IMF added.

“The authorities have continued to make strong progress in stabilising and creating a more market-based economy,” IMF Managing Director Kristalina Georgieva said.

“In the face of high external and domestic risks, agile policy-making and contingency planning remain essential to safeguard the programme’s objectives,” she added.

Political uncertainty

“Heightened political uncertainty in 2025 temporarily weighed on growth, disinflation and external stability, but policy adjustments have since been implemented, leading to a build-up in reserves, renewed disinflation and improved market confidence, despite a more complex global backdrop,” the IMF said.

The Fund added that the authorities remained committed to maintaining stability “through a balanced policy package that supports disinflation while strengthening external sustainability and fostering growth, including to secure timely and durable international market access.”

According to the IMF, the Milei administration has pledged “further reductions in energy subsidies, improved targeting of social transfers and containment of discretionary spending” to offset the impact of congressional spending initiatives.

The lender also highlighted the government’s intention to pursue tax and pension reforms.

“The sustained implementation of the Central Bank’s FX purchase programme, combined with continued exchange rate flexibility, remains essential to decisively rebuild external buffers and strengthen Argentina’s capacity to manage shocks,” the Fund said.

It added that the monetary framework should continue evolving to support disinflation and greater exchange-rate flexibility, while calling for stronger Central Bank transparency and measures to reduce interest-rate volatility.

Waiver

Speaking before the board’s approval, Economy Minister Luis Caputo’s deputy, José Luis Daza, outlined details of the latest review.

“The second review includes a series of targets regarding reserve accumulation and was necessarily linked to the completion of the 2026 financing programme. The 2026 financing programme is fully finalised, the funding sources have been identified, and the final issue to be agreed was the guarantees,” Daza wrote on social media.

“We are going to issue loans backed by guarantees from the IDB, the World Bank, the World Bank Guarantee Agency and, very likely, CAF. MIGA and the World Bank are going to provide us with a US$2-billion guarantee,” he added.

Central Bank Governor Santiago Bausili revealed Monday that the government had been granted a waiver by the IMF after missing targets. In exchange, he said, the Fund requested measures including steps to normalise the monetary framework and reduce interest-rate volatility.

Argentina remains the IMF’s largest debtor, with the Milei administration operating under the new US$20-billion EFF programme agreed in 2025.

The programme was designed both to refinance part of the country’s previous US$44-billion IMF arrangement and to support President Javier Milei’s efforts to dismantle currency controls, rebuild Central Bank reserves and regain access to international capital markets.

The IMF forecasts Argentina’s economy will grow 3.5 percent this year, down from 4.4 percent in 2025, while inflation is projected at around 30 percent.

Milei’s programme of spending cuts and subsidy reductions has sparked protests across Argentina, though the government secured congressional backing last year for key reforms.

During Milei’s first term, annual inflation fell from 117 percent in 2024 to 31 percent in 2025.

Argentina also posted a fiscal surplus in 2025 and, after improving its representation in last year’s legislative elections, the government plans to press ahead with further reforms next year.

– TIMES/AFP/BLOOMBERG/NA