Argentine Central Bank reserves stronger after FMI disbursement

Argentine Central Bank reserves stronger after FMI disbursement

After the International Monetary Fund (IMF) Board approved the staff-level agreement with Argentina’s current administration, the Government of President Javier Milei received a US$ 4.7 billion disbursement which bolstered the Central Bank (BCRA) reserves to US$ 27.635 billion, it was reported Wednesday in Buenos Aires. The latest deal between Argentina and the IMF unblocked a new series of disbursements.

First of all, a maturity worth US$ 1.954 billion was paid, while US$ 800 million are to be used for other loans Thursday. Another US$ 960 million will go to the CAF in return for the December 2023 agreement. The rest of the IMF money will be used to meet April’s commitments which also amount to some US$ 1.94 billion, it was explained.

The Fund’s Board of Directors analyzed the technical agreement reached with Argentina within the framework of the seventh review of the Extended Facilities Program.

In this scenario, Economy Minister Luis Toto Caputo insisted on the Milei administration’s goal for this year to achieve a primary surplus of 2% and to accumulate US$ 10 billion in net reserves.

In a recent press conference, IMF economist Pierre-Olivier Gourinchas explained that the initial economic conditions of Javier Milei’s government were “very deteriorated.” He also underlined the Libertarian administration’s willingness to reach the surplus target promised for this year. “That means a fiscal adjustment equivalent to 5% of GDP. It is an important adjustment that we consider absolutely necessary for Argentina because the cause of the inflationary process is that there was a lot of monetary financing to the Government,” Gourinchas said.

The IMF also published a report earlier this week forecasting a 2.8% drop in GDP in 2024 with inflation reaching 150%.