The administration of Javier Milei has been instructed by the International Monetary Fund to increase its foreign reserves. This comes with the acknowledgement that Argentina will face “difficulties” in meeting its year-end accumulation target. Julie Kozack stated, “At this stage, meeting the end year reserve target will be challenging. Nevertheless, it is of the utmost importance that the authorities take a coordinated approach in the coming time frame in order to reconstruct international reserves.” The warning that has been issued by the International Monetary Fund serves to amplify the conversation that is currently taking place between the team of Milei and a number of investors in regard to the requirement for the government to revise its currency strategy. This issue has been a recurrent point of weakness in Argentina’s historical dealings with the Fund.
Kozack remarked, “We continue to advocate that the authorities should utilize the current window of opportunity to establish a consistent and robust monetary and foreign exchange framework to facilitate the accumulation of reserves.” She refrained from making any guesses about whether or not Argentina would be required to petition for an exception or forgiveness in the event that they did not achieve the important threshold. The International Monetary Fund had already reduced its target for dollar reserves in its most recent review.
In order for Argentina to be able to receive the next tranche of International Monetary Fund money, which is around US$5 billion less than the previous aim, it has been demanded that the country improve its net hard-currency reserves to a negative US$2.6 billion by the end of the year.