Argentina secures $32bn (£24bn) lifeline to end currency shackles
He declared that today marks the end of a cycle of disappointments, as the country starts moving forward once again.The President of Argentina, Javier Milei, announced that his country will receive a total of $32 billion (£24 billion) in loans from the International Monetary Fund (IMF), the World Bank, and other institutions. This financial aid will enable the government to lift longstanding currency exchange restrictions. He declared that today marks the end of a cycle of disappointments, as the country starts moving forward once again.
Argentina negotiated a 48-month loan agreement with the IMF, amounting to $20 billion (£15 billion), with $12 billion (£9 billion) to be disbursed on Tuesday.
The World Bank has announced a $12 billion (£9 billion) aid package for Argentina, describing it as a Reuters reported, describing it as "signaling a strong vote of confidence in the government’s efforts to stabilize and modernize the economy."
The agreements were also announced by President Milei, who, since taking office in 2023, has pursued a policy of drastically cutting public spending and implemented economic "shock therapy" to combat rampant inflation and pull the country out of a deep financial crisis.
Milei stated that, thanks to this financial injection, the Central Bank's reserves will rise to $50 billion (£38 billion), which will allow the elimination of longstanding currency exchange restrictions, referred to in Argentina as "cepo" (literally: shackles).
"Today we break the circle of disappointments and begin to move forward again. We break the last link of the chain that restrained us. We eliminate the cepo forever," said Milei in a 22-minute speech recorded in the Pink House, the presidential palace in Buenos Aires.
The Argentine Ministry of Economy and the Central Bank announced that from Monday, the limit on dollar purchases by individuals in banks and exchanges, currently $200 (£152) per month, will no longer apply. Control over the official dollar exchange rate will also be relaxed, allowing it to fluctuate from 1,000 to 1,400 pesos, and these limits will gradually be widened.
22 loans for Argentina. Debt exceeds $40 billion (£30 billion)
The Minister of Economy, Luis Caputo, assured that lifting restrictions does not mean a devaluation of the peso. However, economists agree that the official exchange rate of the Argentine currency, which on Friday was just under 1,100 per dollar, will most likely fall and align more closely with the black market, where on Friday the dollar was traded for 1,375 pesos.
Since 1958, Argentina has received 22 loans from the IMF, and its debt to the fund exceeds $40 billion (£30 billion). Over the past year, Milei's radical reforms have managed to control triple-digit inflation and achieve a budget surplus, but this has come at the cost of worsening the financial situation of the lowest-earning Argentines, especially retirees and pensioners.
