Argentina will pay $912 million owed to the International Monetary Fund next week while it seeks to renegotiate the country’s $44 billion deal, according to Economy Minister Luis Caputo.
Author of the article:
Bloomberg News
Manuela Tobias and Patrick Gillespie
Published Dec 13, 2023 • 2 minute read
Luis Caputo Photo by Andrew Harrer /Photographer: Andrew Harrer/Bloo
(Bloomberg) — Argentina will pay $912 million owed to the International Monetary Fund next week while it seeks to renegotiate the country’s $44 billion deal, according to Economy Minister Luis Caputo.
In his first interview since taking office this week, Caputo said President Javier Milei’s administration will honor the upcoming repayment despite repeating in previous occasions that “there’s no more money.” He didn’t elaborate on changes the government would like to make to the IMF program, nor did he say where the funds to to make the Dec. 21 repayment will come from.
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“We’re reformulating the agreement that had already crashed,” Caputo told a local TV station on Wednesday. “We’re going to pay the IMF maturity.”
Read More: Argentina Devalues Peso by 54% in First Batch of Shock Plans
Those were the first comments by Caputo since he unveiled the new administration’s initial economic plans, including a massive currency devaluation and a series of spending cuts designed to eliminate the primary fiscal deficit next year.
IMF Managing Director Kristalina Georgieva said the Washington-based lender supports the “decisive measures” proposed by Milei’s administration. The government expects to pay the IMF using funds from the Latin America development bank known as CAF, according to senior government officials.
Investors also welcomed Caputo’s measures, long seen as overdue in Argentina. The nation’s dollar bonds rose to two-year highs, while the parallel exchange rate remained steady Wednesday — allowing the gap with the official rate to narrow significantly.
Read More: On Day One of Argentina Overhaul, Milei Scores Crucial Victory
Caputo said the market understood what he described as an orthodox stabilization plan, calling its positive reaction a “vote of confidence.”
In order to slash the fiscal deficit, Caputo said Argentina will gradually cut subsidies to energy and transportation starting in February or March as the government seeks to eliminate economic distortions that fuel inflation. The unwinding of subsidies will take several years, he added.
Caputo didn’t rule out the possibility of social unrest over the new measures, but assured Milei’s administration is prepared to face those who resist them.
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