WASHINGTON, Feb 1, 2024 (AFP) – The International Monetary Fund on Wednesday approved a fresh $4.7 billion for Argentina, praising the new administration of President Javier Milei as he enacts “bold” cost-cutting to bring the country’s ailing economy back on track.
The new disbursement — which brings to around $40.6 billion the amount sent to Argentina as part of a $44 billion aid program — is intended “to support the new authorities’ strong policy efforts to restore macroeconomic stability,” the IMF said in a statement.
IMF chief Kristalina Georgieva praised the Milei government’s “bold actions to restore macroeconomic stability and… address long-standing impediments to growth.”
Milei, a libertarian and self-described “anarcho-capitalist,” took office in December vowing to slash spending and end decades of economic crisis.
Argentina is grappling with severe economic struggles after decades of mismanagement that has driven poverty levels to 40 percent, and pushed inflation to an annual rate of more than 200 percent.
Milei, a 53-year-old outsider, won a resounding election victory on a wave of fury over the crises marked by debt, rampant money printing, inflation and fiscal deficit.
But his cost-cutting measures have also prompted backlash and mass protests, with many citizens fearing he will leave them less well-off.
Milei began his term in office by devaluing the peso by more than 50 percent, cutting state subsidies for fuel and transport, reducing the number of ministries by half, and scrapping hundreds of rules so as to deregulate the economy.
The government’s “initial actions averted a balance of payments crisis, although the path to stabilization will be challenging,” Georgieva said, a day after the IMF forecast that Argentina will suffer a recession this year, with a contraction of 2.8 percent.
Milei has argued that economic “shock” treatment is the only solution to the country’s troubles, and warned that the situation will get worse before it improves.
The IMF announcement came the same day that Argentina’s lower house of Congress began what is expected to be a marathon debate on Milei’s mega-bill to reform the economy, politics and even some aspects of private life — touching on everything from cultural issues to the penal code to divorce.
Milei does not hold a majority in Congress, and moderate opposition lawmakers have warned they will seek further changes to the bill, in particular on the touchy issue of the delegation of special powers to the executive in an economic emergency, and on the scope and extent of privatizations.