The International Monetary Fund provided support to President Javier Milei, noting Argentina’s economic “progress” and encouraging the government to maintain its current direction. “We see the important progress in lowering inflation, leading to monthly price rises of less than two percent for the fourth month in a row,” stated IMF Spokesperson Julie Kozack. Just days after the ruling party faced a significant loss in important regional elections in Buenos Aires Province, Kozack praised the Milei administration for its achievements in managing inflation and maintaining fiscal surplus numbers.
She cautioned about the ups and downs of interest rates and the harmful impacts it might have on the economy. In August, inflation stayed at 1.9 percent. In the first eight months of the year, the government’s consumer price index hit 19.5 percent, down significantly from the 94.8 percent seen during the same time in 2024. Argentina has achieved a primary fiscal surplus, which is before paying interest on its debt. The IMF has expressed its approval of this, as Kozack pointed out, stating that it matches the goals of the current program. In April, the Milei administration secured a deal with the IMF for a new four-year loan totaling US$20 billion, having already received US$14 billion of that amount. Argentina has a US$44-billion program with the Fund that started in 2018, which was agreed upon by the government of former president Mauricio Macri. Kozack stated that the IMF does not have particular worries about the Milei government’s recent actions in the foreign exchange market, which were intended to stop the peso from losing value against the US dollar. “We learned about these actions from the Argentine Treasury.” The authorities made it clear that this was a short-term action due to significant market fluctuations,” she explained.
Kozack stated, “In our talks with the authorities, we have kept emphasizing the need for a clear, steady, and reliable monetary and exchange rate system to help control market fluctuations.” The peso has faced challenges for a few weeks due to concerns in the financial markets ahead of the elections. Tensions grew after claims of corruption linked to the president’s sister, Karina Milei, who is also the chief of staff. Milei’s party, La Libertad Avanza, faced a noticeable defeat in the legislative elections held on Sunday in Buenos Aires Province. This area is crucial as the country approaches the midterm elections in October, where some members of Congress will be replaced. After the vote, the President confirmed his dedication to carrying out his economic plan, emphasizing key priorities such as a “balanced budget,” a “tight monetary market,” and the peso’s managed float against the US dollar as per the agreement with the IMF. Kozack stated on Thursday that the Fund “urges the authorities to persist in their efforts, to keep rebuilding foreign exchange reserves and to boost confidence in the peso.”
The spokesperson stated that Economy Minister Luis Caputo had a phone conversation this week with IMF Managing Director Kristalina Georgieva. However, the multilateral lender does not anticipate Caputo will travel to Washington until next month for the IMF’s annual meeting. Kozack stated that “The IMF staff remains closely engaged with the Argentine authorities in implementing their programme,” which “aims to durably entrench stability and strengthen Argentina’s growth prospects. We are eager for the 2026 budget to keep this progress going and to set the stage for important fiscal changes, as well as to strengthen the successes required to achieve this,” she said.