Argentina will pay US$912 million owed to the International Monetary Fund next week while it seeks to renegotiate the country’s US$44-billion deal, according to Economy Minister Luis Caputo.
In his first interview since taking office this week, Caputo said President Javier Milei’s administration will honour the upcoming repayment despite repeating in previous occasions that “there’s no more money.” He didn’t elaborate on changes the government would like to make to the IMF programme, nor did he say where the funds to make the December 21 repayment will come from.
“We’re reformulating the agreement that had already crashed,” Caputo told a local TV station on Wednesday. “We’re going to pay the IMF maturity.”
Those were the first comments by Caputo since he unveiled the new administration’s initial economic plans, including a massive currency devaluation and a series of spending cuts designed to eliminate the primary fiscal deficit next year.
IMF Managing Director Kristalina Georgieva said the Washington-based lender supports the “decisive measures” proposed by Milei’s administration. The government expects to pay the IMF using funds from the Latin America development bank known as CAF, according to senior government officials.
Investors also welcomed Caputo’s measures, long seen as overdue in Argentina. The nation’s dollar bonds rose to two-year highs, while the parallel exchange rate remained steady Wednesday — allowing the gap with the official rate to narrow significantly.
Caputo said the market understood what he described as an orthodox stabilisation plan, calling its positive reaction a “vote of confidence.”
In order to slash the fiscal deficit, Caputo said Argentina will gradually cut subsidies to energy and transportation starting in February or March as the government seeks to eliminate economic distortions that fuel inflation. The unwinding of subsidies will take several years, he added.
Caputo didn’t rule out the possibility of social unrest over the new measures, but assured Milei’s administration is prepared to face those who resist them.
by Manuela Tobias & Patrick Gillespie, Bloomberg
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