Thursday, July 18, 2024

ARGENTINA | 13-12-2023 16:59

Argentina to ask for waiver from IMF to keep agreement afloat

International Monetary Fund praises new measures by Javier Milei's government, which wants to settle a payment due December 21 with funds from CAF Development Bank of Latin America and the Caribbean.

Argentina will ask the International Monetary Fund (IMF) for a waiver for breaches of its ongoing US$44.5-billion programme in order to keep it afloat and to move forward with a new reformulation of maturities and disbursements.

The detail was informed by the Central Bank in a press release accounting for the general guidelines of the entity in this new stage.

“We have started and rapidly progressed in the formal dialogue with international bodies, including the International Monetary Fund. The core goal is to remove any uncertainty around the agreed-on disbursements with a view to attending to future capital maturities,” said the BRCA.

In that vein, it stressed that “this uncertainty accounts for the obligation facing Argentina to start the formal process to request a waiver for the breaches in August this year."

“The Government will strive to reinstate the effectiveness of the agreement signed with the IMF and carry out additional negotiations it considers will contribute to improving the financing conditions currently in force,” the monetary authority underlined.

Argentina's economic team also revealed that an upcoming US$900-billion maturity due Thursday, December 21 will be settled with funds from the CAF Development Bank of Latin America and the Caribbean.


Strong backing

The moves come after IMF staff offered strong support for Argentina's steep currency devaluation and move to cut government spending.

In remarks issued almost immediately after Economy Minister Luis Caputo unveiled the measures, IMF staff said the moves would "restore stability" to the crisis-ridden country.

"I welcome the decisive measures announced by President [Javier Milei] and his economic team today to address Argentina’s significant economic challenges—an important step toward restoring stability and rebuilding the country’s economic potential," said IMF Managing Director Kristalina Georgieva in a post on the X social network.

In parallel, IMF spokeswoman Julie Kozack released a positive statement to the presss.

“IMF staff welcome the measures announced earlier today by Argentina’s new Economy Minister, Luis Caputo. These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime. Their decisive implementation will help stabilise the economy and set the basis for more sustainable and private-sector led growth," said Kozack.

"IMF staff and the new Argentine authorities will work expeditiously in the period ahead. Following serious policy setbacks over the past few months, this new package provides a good foundation for further discussions to bring the existing Fund-supported programme back on track," she added.



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