The Latin American country already owes the fund some $44 billion
President of Argentina Javier Milei gives a speech after his Inauguration Ceremony at “Casa Rosada” Presidential Palace on December 10, 2023 in Buenos Aires, Argentina. © Getty Images / Tomas Cuesta / Stringer
Argentina is in talks with the IMF over a new aid program designed to accelerate the process of exiting from capital controls, Bloomberg reported on Thursday, citing a senior government official.
The IMF is pushing the government to let the currency devalue faster under its so-called “crawling peg,” and keep interest rates above soaring inflation, the unnamed official told the outlet.
President Javier Milei has pledged that he would eliminate the so-called ‘cepo’ – the word used by Argentines to refer to currency restrictions – before the end of the year.
Argentina already owes the IMF some $44 billion. In January, the fund agreed to unlock $4.7 billion for the country as part of a debt restructuring plan even though Buenos Aires has missed targets related to its multi-billion loan program.
Latin America’s third-largest economy, Argentina is bearing the brunt of a severe economic crisis after decades of debt and financial mismanagement. An estimated 40% of Argentinians are living in poverty. The nation’s annual inflation rate is among the highest in the world – at around 250% – and is expected to climb faster in the months ahead, after the government devalued the peso by over 50% as part of Milei’s so-called ‘shock therapy’ reforms to stabilize the ailing economy.
READ MORE: IMF slashes Argentina’s growth forecast over Milei’s ‘shock therapy’
Shortly after taking office in December, the self-described ‘anarcho-capitalist’ Milei has embarked on a dramatic cost-cutting drive to turn things around. The reforms slashed worker protections, deregulated industries, and cut energy and transportation subsidies, among other things. Despite harsh criticism and protests by labor unions, Milei has so far stood by his new policies, warning that it will take time for results to be seen and that things could get worse before they get better.
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