A new US$15-billion loan from the International Monetary Fund (IMF) may be in the works, according to President Javier Milei. In two radio interviews this week, he said his administration is considering the move to lift the series of exchange restrictions known as cepo in Argentina. 

“The faster we get [that money], the faster we will be able to lift the cepo,” Milei said in a Radio Mitre interview on Saturday afternoon. “The IMF thinks we could lift the restrictions midway through the year.”

The government had committed to lifting currency exchange restrictions in late January after the IMF board approved the latest staff-level agreement it had reached with Argentina and disbursed US$4.7 billion. 

According to Milei, new disbursements could accelerate the path towards a “currency competition system” that would include the Argentine peso. The US$15 billion would be part of ongoing negotiations with the lender. In a radio interview on Friday with La Red radio station he described the “currency competition system” as an intermediate step before eliminating the Central Bank and dollarizing the economy.

“If someone gave me US$15 billion today, I would [lift the cepo] right now, but since I don’t have that, I need to keep working on cleaning up the Central Bank,” Milei said. 

Dollarization and shutting down the Central Bank were among the president’s flagship economic proposals on the campaign trail, roundly rejected by analysts. “I always talked about currency competition, some call it dollarization because it’s easier,” he claimed.

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Economy Minister Luis Caputo had already hinted at the government seeking to get a US$15 billion disbursement on Wednesday during the United States Chamber of Commerce in Argentina Summit, saying that money “could come from the IMF or somewhere else.”

IMF First Deputy Managing Director Gita Gopinath visited Argentina last month. After meeting Caputo, she stated that the road to recovery is still challenging and that a consistent monetary and exchange policy is required to reduce inflation and restock the country’s reserves.

She also said that President Milei’s economic plan has shown “progress” in achieving macroeconomic stability, but warned that it was necessary to guarantee that the burden of the austerity measures did not fall disproportionately on the backs of working-class families. Food and services prices have skyrocketed since Milei took office in December after he applied a series of economic deregulation measures that have led to increasing prices, stagnant salaries, and a recession.

The IMF returned as a major player in Argentina’s economy when then-president Mauricio Macri signed a record-high loan of US$44 billion in 2018. The debt was renegotiated under President Alberto Fernández, agreeing on an Extended Fund Facility program with the lender. This includes an economic program that Argentina must comply with to receive disbursements every three months, which the government uses to pay the previous debt. The agreement reached in January is the lender’s seventh review under the new deal.

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