The International Monetary Fund (IMF) on Friday welcomed measures announced by Argentina’s economic team that involve eliminating another source of monetary emission to lower inflation.
“We welcome the measures announced by the Minister of Economy, Luis Caputoand the president of the Central Bank, Santiago Bausilito strengthen the monetary policy framework,” reported official IMF sources.
Caputo announced this Friday the “second stage” of the stabilization plan of the Government of Javier Milei, consisting of eliminate the issuance of money by the Central Bank (BCRA) for the interest paid on the liabilities of the monetary entity.
“In the first stage, the money supply was closed due to the fiscal deficit, something that was greatly abused by the previous government and generated this imbalance and the inflation that we are experiencing,” said Caputo.
“In this second stage we are closing the tap of the second emission channel, which is the interest that the BCRA pays on remunerated liabilities”, the minister explained.
Milei’s Government achieved a fiscal surplus of 0.4% of GDP in the first five months of the yearthus eliminating the first cause of monetary emission, which served as a fiscal anchor for slow down monthly inflation from 25.5% in December 2023 to 4.2% last May.
The elimination of monetary emission for the liabilities of the BCRA is announced after Congress approved in the early hours of this Friday the so-called “Ley Bases” and a fiscal package, an ambitious package of economic reforms that is expected to allow him to consolidate fiscal balance.
“The exit from the stocks is a third stage”stated Caputo, in reference to the lifting of restrictions to access the exchange market, according to the Efe agency.
Argentina is negotiating a new program with the IMF, after the Executive Board approved the eighth revision of the agreement that expires in November on June 14, which allowed an immediate disbursement of approximately 800 million dollars for the country.
“This part of the monetary program will be part of this new program. We thought it was important to bring it forward with the IMF, because we are in mutual agreement,” said Caputo, regarding what was announced on Friday.
Total disbursements made under the Fund’s agreement with Argentina amount to approximately $41.4 billion.
In March 2022, the then Peronist Government Alberto Fernandez (2019-2023) signed an agreement with the IMF to refinance loans for about 45,000 million dollars that the organization had granted to Argentina in 2018, during the presidency of the conservative Mauricio Macri (2015-2019).
The approval for new disbursements to Argentina by the IMF depends on the fulfillment of the quarterly goals and the approval of each review, funds that, in turn, the South American country uses to cancel its debt with the entity, which amounted to 40,899 million dollars by the end of 2023.
