The IMF strikes a $20 billion deal to bail out Argentina’s economy

The International Monetary Fund (IMF) has reached a preliminary agreement with Argentina on a $20 billion bailout package. The financial boost could offer President Javier Milei a lifeline to push his economic reforms, meant to break populist policies the country had been operating on for decades.

Sources familiar with the matter, cited by Bloomberg, said the staff-level deal is still awaiting approval from the organization’s executive board, which is scheduled to meet on Friday. 

The agreement comes after weeks of behind-the-scenes discussions between Argentine officials and IMF representatives, centered largely on Argentina’s foreign exchange policy and the size of an initial disbursement.

Although the specific terms of the arrangement have not been published, the anonymous sources confirmed that the final approval by the board does not require the agreement to be made public.

President Milei to use funds in economic reforms

President Milei, a former television commentator and self-described “anarcho-capitalist,” has spent his first 16 months in office implementing aggressive austerity measures that have improved Argentina’s relationship with the IMF. 

Local news outlets reported that his administration has fired over 36,000 public sector workers, scrapped government ministries, reduced spending by 30%, and removed price controls and subsidies, all in a bid to stabilize the country’s fragile economy.

Milei’s agenda is to turn the South American country away from laws placed by the previous left-wing governments, which relied on heavy borrowing and money printing. The resulting inflation, currency depreciation, and multiple debt defaults left Argentina in chronic financial instability and debt. 

Cryptopolitan revealed in December that Milei succeeded in flipping a fiscal deficit into a surplus of 3.9% GDP with reduced inflation. Yet, even as international markets have lauded Milei’s policies, critics have slated the government for letting Argentina’s poorest citizens bear the brunt of 2025’s economic downturn. 

According to a recent study by the Catholic University of Argentina, poverty affected 57.4% of the population in January 2025, the highest level recorded in two decades. Of those, 15% are classified as living in extreme poverty or “destitution.”

Retirement pensions saw the steepest cuts under President Javier Milei’s economic strategy during the first ten months of 2024, with a reduction of 24.2%. The sharp decline has angered pensioners, many of whom joined unions and left-wing parties in a turbulent protest outside the National Congress towards the end of March.

Exchange reserves running low as peso wobbles

Argentina could be in dire need of an IMF loan now because foreign exchange reserves are reportedly getting depleted. Milei’s government has restricted money printing to curb inflation, although he is simultaneously using dollar reserves to stabilize the volatile Argentine peso. 

Analysts feared that without immediate access to a major source of foreign currency, the administration’s fiscal tightening could push the country back into default territory.

Argentina still owes over $40 billion from a previous 2022 program with the IMF, and the new loan is expected to help service those obligations. However, the next capital repayment to the IMF is not due until September 2026. 

The Milei administration is pushing for a significant portion of the new loan to be front-loaded, or rather “disbursed upfront,” to rebuild reserves and maintain economic momentum.

In an interview with Reuters last week, IMF Managing Director Kristalina Georgieva said an initial disbursement of 40% would be “reasonable.” However, according to Argentina’s La Nacion newspaper, officials are now discussing an opening disbursement as high as 60%.

Moreover, negotiations between Argentina and the IMF were complicated by concerns over the Fund’s growing financial exposure to its largest debtor. Providing a larger up-front tranche would increase the risk to the IMF while giving Argentina more flexibility to manage its currency crisis. 

Argentina prevents businesses from repatriating profits and requires the central bank to manage the peso’s peg to the dollar. Milei has said that loosening these controls helps restore investor confidence and encourages foreign capital to flow back into the country.

The IMF, in its statement Tuesday, said the agreement “builds on the authorities” and supports what it called “the next phase of Argentina’s homegrown stabilization and reform agenda.”

Seeking US diplomacy to ease loan talks

In the lead-up to the deal, Merco Press reported that Milei and his economy minister, Luis Caputo, traveled to Florida last week to seek US backing for the IMF proposal. Though Milei had suggested he might meet informally with US President Donald Trump during the trip, the meeting never materialized. 

Speaking on behalf of President Donald Trump, US Secretary of State Marco Rubio said that countries aligning themselves as friends, allies, or partners of the United States would see tangible benefits.

“There are benefits for your country and for your people in doing so. We want to enter into terms of partnership,” Rubio said.

Still, many Argentines associate the IMF with the 2001 economic crisis and debt default, which they assert led to the country’s economic collapse. 

Most of the funds disbursed to Argentina in the past have been used to repay previous loans, a cycle that naysayers say has done little to solve the country’s underlying structural problems.

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