President Javier Milei government has decided to unify the January payments on Argentina’s multi-billion-dollar debt to the International Monetary Fund (IMF), postponing them until the end of the month.
The moves comes as Buenos Aires awaits the arrival of IMF officials for key talks aiming to refloat the agreement that dates back to 2018.
Some US$1.95 billion were already due in the first half of the month, according to Economy Ministry data. The approach was previously been confirmed to Perfil by Economy Ministry sources. This month’s calendar had contemplated the cancellation of US$1.3 billion on January 9 and US$650 million on January 16.
This 'bundle' operation was already deployed by Argentina’s previous Economy minister Sergio Massa last June, July and October amid a shortage of Central Bank reserves which remains persistent. For last month’s commitments, the La Libertad Avanza administration used a bridging loan of US$960 million from the CAF (Corporación Andina de Fomento) Latin American development bank, obtained by the new Economy Minister Luis Caputo to meet its obligations.
Meanwhile the libertarian government aims to start the new year complying with its main short-term and medium-term economic objectives – to renegotiate the agreement with the IMF, which has "virtually collapsed" after not meeting the targets agreed during the Alberto Fernández Presidency.
The latest agreement at technical level, following the fifth and sixth reviews of the programme between late July and mid-August, was based on three pillars: the fiscal deficit, the accumulation of reserves and Central Bank assistance to the Treasury.
The non-compliance of these objectives on the part of Fernández and Massa (with the deficit growing during the second half of the year due to the various economic policies announced during the electoral campaign, the surge in inflation and the drastic fall of the reserves to levels unprecedented in the last two decades) triggered a virtual collapse of the programme.
At the start of this new year, refloating all that is one of the priorities of Javier Milei, who seeks to keep the current financing plan going with a view to gaining the remittance of almost US$3 billion scheduled for November but cut short by the suspension of the seventh review of the agreement.
The Economy Ministry will seek a waiver prior to working out a new timetable of payments. But beforehand the national government will have to present a "strong and credible stabilisation plan with political support," as requested by IMF Communications Director Julie Kozack at a press conference last month.
That was on the cards for last Thursday’s meeting between the newly arrived IMF committee and Economy Minister Caputo together with Cabinet Chief Nicolás Posse, as anticipated by presidential spokesman Manuel Adorni last Tuesday.
It should be added that within hours of La Libertad Avanza’s presidential triumph, a committee including both Caputo and Posse was on its way to Washington to begin the dialogue.
At the same time Milei made long-distance contact with IMF Managing Director Kristalina Georgieva in a meeting described by the latter as a "very constructive commitment, a very serious discussion."
"I told her about different aspects of our plan for fiscal adjustment and our monetary programme. The IMF showed itself to be cooperative towards finding the structural solutions which Argentina needs," the President recounted on his side.
During the electoral campaign, Milei repeatedly promised that the programme to be applied, as reflected by his first economic measures enshrined in the emergency decree DNU 70/2023 and the omnibus law, "would be much tougher" than proposed by the IMF for the country. Measures which indeed commanded IMF support.
“These strong initial actions aim at significantly improving public finances in a manner which protects the most vulnerable members of society and strengthens the exchange rate regime. Its determined application will contribute towards stabilising the economy and laying the bases for a more sustainable growth led by the private sector,” maintained the IMF in an official communiqué published in mid-December.
According to the 2024 calendar of payments, which could be altered after the negotiations between the government and the IMF, Argentina will have to repay almost US$7.5 billion this year, distributed in the following manner:
– US$1.922 billion in January
– US$810 million in February
– US$1.922 billion in April
– US$743 million in May
– US$641 million in July
– US$727 million in August
– US$716 million in November.
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