Agreement With the Imf: the Government Seeks to Secure the Key Support of the United States

The Argentine Government seeks to unlock the negotiation with the International Monetary Fund (IMF) by strengthening its relationship with the political leadership of the organization and with the United States Treasury Department.

The White House plays a key role in defining the IMF's stance, so the Executive Branch needs to secure the support of Scott Bessent, the Treasury Secretary appointed by Donald Trump.

The weight of the United States in the negotiation with the IMF

The United States holds 16% of the IMF's shareholding, and although it doesn't have a formal veto, its influence on the organization's decisions is decisive. For Argentina to access a financial program beyond its corresponding quota, the agreement must have 85% approval from the board.

The Government seeks not only for the White House to support the agreement's approval but also to act as a promoter within the IMF to convince other directors to support the financial assistance.

A combined strategy: technical and political to reach a good port

The economic team, led by Deputy Minister José Luis Daza, maintains constant technical dialogue with the IMF from Buenos Aires and Washington. Meanwhile, the Casa Rosada promotes a political-diplomatic strategy to consolidate key support in the negotiation.

The main objective is to strengthen the Central Bank's reserves in a context of low reserves inherited from the Kirchner administration. Various market reports warn that the IMF has indicated the need to give greater prominence to monetary policy along with an exchange rate flexibility.

What separates and what brings the Government and the IMF closer?

The Minister of Economy, Luis Caputo, confirmed that the agreement with the IMF will be sent to Congress for approval. Initially, the possibility of avoiding this step was evaluated, given that the operation doesn't imply an increase in net debt, but a change of creditor.

The IMF funds would be used for the Treasury to cancel Non-Transferable Letters held by the Central Bank, transforming intra-public sector debt into a liability with the organization.

Points in discussion:

1. Program amount: USD 11 billion is being discussed, although there is no official confirmation.
2. Disbursements: The sequence of payments is key to determining if the assistance will allow a quicker exit from the exchange rate trap.
3. Exchange rate scheme: Includes the evolution of the crawling peg, the exporter's blend dollar, and current restrictions.

Caputo denied that the IMF demands a devaluation and assured that the exchange rate scheme after the agreement is already defined.

The IMF's conditions and the future of economic policy

The IMF has praised the stabilization achieved by the Government but has pointed out pending challenges. In its latest technical report, the organization warned that Argentina needs to:

1. Accumulate reserves more quickly.
2. Review the fiscal strategy to ensure its long-term sustainability.
3. Further flexibilize the exchange rate to avoid economic distortions.

Additionally, the IMF staff indicated that the current policy of exchange controls must be progressively dismantled to regain access to international markets.