Liliana Franco International Monetary Fund (IMF) officials knew in advance that the Argentine Treasury would intervene in the foreign exchange market, lender spokesperson Julie Kozack said in a press conference on Thursday. Kozack also reiterated the need to accumulate reserves through transparent mechanisms.
“We have continued to emphasize the importance of a transparent, consistent, and predictable monetary and FX framework to help manage market volatility,” she said.
The spokeswoman said that Argentine Economy Minister Luis Caputo spoke with the agency’s managing director, Kristalina Georgieva, earlier this week. The minister is not planning to meet with the lender before the fund’s annual meeting in mid-October in Washington, Kozack added.
The IMF’s response
Last week, the Argentine government announced that the Treasury was going to start intervening in the exchange market.
“Our staff was informed of the recent spot market interventions by the Treasury, which the authorities explained were a temporary response to heightened market volatility,” said Kozack.
Experts estimate that the Fund would welcome Argentina implementing a reserve accumulation scheme similar to Chile’s.
When asked about the situation regarding the Central Bank’s foreign exchange accumulation, the spokesperson again pointed to the latest technical staff report.
“We have encouraged the authorities to continue their efforts to continue to rebuild reserves, to strengthen confidence in the peso, reduce spread, and secure access to international capital markets,” she said.
The official did not answer a question posed by Herald sister publication Ámbito regarding how last Sunday’s Buenos Aires province election results could affect support for the reforms needed to consolidate the economic program.
Instead, she celebrated the government’s “continued adherence to the fiscal anchor” and the “important progress in reducing inflation,” adding that the monthly price increase was “below 2% for 4 consecutive months.”
The spokesperson recalled the technical staff report for the first review of the program, noting that “enhancements in the monetary and liquidity management framework should continue to mitigate interest rate volatility and the associated negative effects on economic activity.”
Support for the government
Market instability and ruling party La Libertad Avanza’s (LLA) resounding electoral defeat last Sunday are causing concern among the leaders of multilateral credit agencies.
Last Tuesday afternoon, the IMF came out in strong support of Javier Milei’s administration amid sharp declines in Argentine assets and tensions with the dollar. At that time, some stocks had lost nearly 20%, the dollar was approaching the upper limit of the band, and the country risk index exceeded 1,100 points.
That day, Kozack posted on X that the IMF was “closely engaged” with the Argentine government’s implementation of a “program for entrenching stability and improving the country’s growth prospects.”
The last time it assessed the progress made by Milei’s administration was at the end of July, when the fund’s board approved the first review of the ongoing program and released a US$2 billion disbursement.