IMF offers Milei timely backing, hails progress on inflation, fiscal reform

The International Monetary Fund (IMF) on Thursday offered timely backing to President Javier Milei, highlighting Argentina’s economic “progress” and urging the government to stay the course.

“We recognise the significant progress made in reducing inflation, which has resulted in monthly price increases of under two percent for the fourth consecutive month,” said IMF Spokesperson Julie Kozack at a press conference in Washington DC.

Speaking days after the ruling party suffered a stinging defeat in key regional elections in Buenos Aires Province, Kozack hailed the Milei administration’s progress on inflation and fiscal surplus figures.

However, she warned of “interest rate volatility” and the “negative effects” it could have on economic activity.

Inflation remained at 1.9 percent in August. Over the first eight months of the year, the government’s consumer price index reached 19.5 percent – a sharp decline from the 94.8 percent recorded in the same period of 2024.

Argentina has recorded a primary fiscal surplus (before interest payments on debt), an effort the IMF “welcomes,” noted Kozack, adding that it “aligns with the objectives of the ongoing programme.”

In April, the Milei administration reached an agreement with the IMF over a new four-year loan worth US$20 billion, of which it has already received US$14 billion.

Argentina also has a US$44-billion programme with the Fund dating back to 2018, agreed by the former president Mauricio Macri’s government.

Kozack said the IMF has no specific concerns regarding the Milei government’s intervention in the foreign exchange market last week, a move aimed at halting the depreciation of the peso against the US dollar.

“Our team was informed of these interventions by the Argentine Treasury. The authorities clarified that it was a temporary measure in response to high market volatility,” she explained.

“In our conversations with the authorities, we have continued to stress the importance of a transparent, consistent and predictable monetary and exchange rate framework to help manage market volatility,” added Kozack.

The peso has been under pressure for several weeks amid pre-election jitters in the financial markets.

Tensions intensified following an alleged corruption scandal involving the president’s sister, Karina Milei, who also serves as the head of state’s chief-of-staff

Milei’s party, La Libertad Avanza, suffered a clear setback in Sunday’s legislative elections in the Buenos Aires Province, a key battleground ahead of the October midterm elections, which will see parts of Congress renewed.

Following the vote, the President reaffirmed his commitment to implementing his economic plan, reiterating as priorities a “balanced budget,” a “tight monetary market” and the peso's managed float against the US dollar as agreed with the IMF.

Kozack said on Thursday that the Fund “encourages the authorities to continue their efforts, to keep rebuilding foreign exchange reserves and to strengthen confidence in the peso.”

The spokesperson confirmed that Economy Minister Luis Caputo spoke by phone this week with IMF Managing Director Kristalina Georgieva.

Nonetheless, the multilateral lender is not expecting Caputo to visit Washington until next month for the IMF’s annual meeting. 

“The IMF staff remains closely engaged with the Argentine authorities in implementing their programme,” which “aims to durably entrench stability and strengthen Argentina’s growth prospects,” Kozack said during Thursday’s briefing.

“We look forward to the 2026 budget to continue this progress and also to lay the groundwork for necessary fiscal reforms and to consolidate the achievements needed to make this happen,” she added.

– TIMES/AFP/PERFIL