IMF Publishes Grim Evaluation of Argentina’s $44 Billion Deal

Buenos Aires: The International Monetary Fund just dropped a pretty gloomy review of its recent program in Argentina. This comes right before President Javier Milei kicks off talks for a new deal this year.

So, the IMF’s staff released this evaluation late Friday, and it’s not looking good. Argentina’s program was a whopping $44 billion, making it the second largest in IMF history, right after the 2018 deal. According to IMF rules, Argentina can’t start a new program until this evaluation wraps up.

IMF Chief Spokeswoman Julie Kozack mentioned back in December that they’ve started negotiations for a new program. This would be Argentina’s third deal in a saga that’s been going on for seven years now. Economy Minister Luis Caputo is hoping to nail down an agreement in the first four months of 2025.

Everyone’s keeping a close eye on Caputo’s talks with the IMF. They want to see if the IMF will throw in more funding beyond that $44 billion and how Argentina plans to lift its currency and capital controls. These are big topics in the ongoing negotiations.

The evaluation paints a pretty bleak picture of Argentina’s latest IMF program, which kicked off in March 2022. It highlights some reckless decisions made by former President Alberto Fernandez that really messed things up for the economy, especially leading up to the 2023 election that Milei won by a landslide.

By mid-2023, the program was nearly at a standstill. The report says commitments were repeatedly broken, and the government’s policies went way off track during the election process.

In short, Argentina was facing a full-blown economic crisis by the time the election wrapped up, according to the report.

After two years of discussions, the 2022 program didn’t get the support it needed. Argentina went through three economy ministers in just about a month. Even though Fernandez backed a new law for the IMF deal, some members of his own party voted against it, showing the political chaos that worsened the economic crisis and helped Milei rise to power.

Since taking office, Milei has had his own challenges with the IMF. One top negotiator even stepped aside due to policy disagreements. Still, the IMF has mostly praised Milei’s tough austerity measures, which have surprisingly helped lower inflation faster than expected.