Argentina's government published a decree on Tuesday backing a new International Monetary Fund (IMF) program, the most concrete step yet towards sealing a new deal that could help the embattled country meet its debts and ease capital controls.
The decree of necessity and urgency (DNU), formalized in the official gazette, is part of a strategy by libertarian President Javier Milei to ram his plan through Congress, where he only has a minority of seats and relies on conservative allies.
Argentina, a serial defaulter, is battling to restore economic stability under Milei, a political outsider who has upended the economy with tough austerity, helping overturn deep fiscal deficits and bringing down triple-digit inflation.
However, he needs more financial firepower to continue his reforms, with central bank reserves still deep in the red, debt repayments looming and a tough election season ahead with a mid-term legislative vote towards the end of this year.
The decree said that the planned extended fund facility (EFF) would involve a repayment period of 10 years with a grace period of four years and six months. It added that the new funds would be used to pay off Treasury debt with the central bank.
It did not give the size in dollars of the new program, though analysts estimate between $10-20 billion. Argentina and the IMF are still negotiating the specifics of the program, though the fund recently cited "good progress" in the talks.
Argentina is the IMF's largest creditor and has a mottled history with the Washington-based lender. The South American grains producer has had 22 programs with the fund, including a recent $44 billion program that it is still repaying.
In the decree, the government said that net reserves had been negative $11.2 billion in December 2023 when Milei came into office and had improved by some $7 billion since, suggesting they remained around $4 billion in the red.
New IMF funds should help bolster that balance and potentially pave the way for Milei to undo capital controls in place since 2019, which skew business and trade.
The decree marks a change from the normal process for the new IMF programs, which would usually be sent in the form of a bill to Congress. A decree only requires support from one chamber of the legislature, making it easier to get approved.
