President Javier Milei of Argentina requested congressional approval for an IMF loan agreement intended to stabilize the central bank and combat inflation. The loan specifics remain undisclosed, but it will facilitate debt repayment to the central bank. Despite facing criticism, recent trends indicate a declining inflation rate since Milei’s inauguration.
On Tuesday, President Javier Milei of Argentina requested congressional approval for an IMF loan agreement aimed at stabilizing the central bank and reducing inflation. This deal, part of the IMF’s Extended Fund Facility, is structured for loan capital repayment over a decade with a grace period of four years and six months, as detailed in a decree published early Tuesday.
Although the specific amount of the additional funds was not disclosed, it is intended to settle treasury bills owned by the Central Bank of Argentina (BCRA) and meet obligations under the IMF program. According to a previous law, Milei must obtain authorization from both chambers of Congress to finalize the agreement; however, securing support from just one chamber is sufficient for it to take effect.
Milei’s party holds a minority in parliament but successfully navigated the approval of two contentious decrees last year regarding funding cuts to retirees and universities. A bicameral congressional committee will provide an opinion within ten working days, following which discussions can commence in both legislative chambers.
In an op-ed for La Nacion, Milei asserted that the IMF agreement would facilitate repayment of the government’s debts to the BCRA. He attributed Argentina’s high inflation to excessive money supply stemming from the deterioration of central bank assets. He expressed optimism, stating, “the agreement with the IMF seeks to restore the assets of the BCRA, so that inflation is only a bad memory of the past.”
However, economist Hernan Letcher criticized the situation, noting that while the creditor is shifting from the state to the IMF, underlying issues remain. As of January, Argentina’s inflation rate stands at an alarming 84.5 percent year-on-year. Nonetheless, since Milei took office, inflation has gradually decreased, from 211.4 percent in 2023 to 117.8 percent in 2024, coinciding with his commitment to cut government spending and address the national debt.
In summary, President Javier Milei has submitted a request to Congress for approval of an IMF loan agreement, which aims to stabilize Argentina’s economy by addressing high inflation and repaying debts to the Central Bank. While the proposal awaits congressional review, its potential impact on national fiscal policies and economic recovery remains a topic of debate among experts. The gradual reduction in inflation rates since Milei’s administration began reflects a shift in economic conditions that may influence future policymaking.
Original Source: thesun.my
