Argentina Considers New Loans From Investment Funds or IMF
Argentina’s government is weighing options for new loans to lift currency controls and stabilize the economy in early 2024
Argentina, IMF, Investment Funds, Currency Controls, Economy
Buenos Aires: So, Argentina is in a bit of a pickle. The government is trying to figure out whether to take a loan from some investment funds or go back to the IMF for more cash. They want to lift those pesky currency and capital controls soon, maybe by February or March.
They’re not looking to do both at the same time, though. A government official, who didn’t want to spill the beans on their strategy, mentioned that they’re in talks but didn’t reveal which funds are involved or how much money they might get.
Interestingly, the Economy Ministry and the central bank didn’t respond to requests for comments. Even the IMF was tight-lipped. President Javier Milei had mentioned a “definitive solution” to these currency controls, but he didn’t give any specifics on timing or the number of private investors involved.
Last month, the IMF confirmed that Argentina is looking for a new deal to replace its hefty $44 billion agreement. The Economy Minister, Luis Caputo, is hoping to wrap up a deal within the first few months of this year, but he didn’t share any figures.
Argentina is trying to secure its third IMF deal since 2018, but it’s still unclear if the IMF will cough up more cash. A year ago, they hinted that they might need around $15 billion to lift the controls, but that number hasn’t been mentioned lately.
The goal of this funding is to help Argentina get rid of those currency restrictions. But technically, the money would go to the Treasury to pay off debts to the central bank. This would help clean up the central bank’s balance sheet, which is currently in the red.
Right now, the central bank has negative net reserves, making it tough to lift the controls without risking a currency selloff. Meanwhile, the government is also negotiating a separate deal with banks for a repurchase agreement worth at least $2.7 billion over three years.
These negotiations come as Argentina is slowly recovering from a tough recession that pushed many into poverty. Recently, things are looking up, with growth picking up and people feeling more confident about depositing money in banks.
Economists are optimistic, predicting that Argentina’s economy could grow over 4% this year as it tries to shake off the triple-digit inflation that’s been a real pain for a while.