The International Monetary Fund (IMF) said Tuesday it reached a preliminary deal with the Argentinian government for a $20 billion bailout package.
"IMF staff and the Argentine authorities have reached a staff-level agreement on a comprehensive economic program that could be supported by a 48-month arrangement under the Extended Fund Facility (EFF) totaling $20 billion (SDR 15.267 billion or 479% of quota)," the fund said in a brief statement.
The deal is subject to approval by the IMF executive board, which is slated to consider it "in the coming days," the statement said.
"The agreement builds on the authorities' impressive early progress in stabilizing the economy, underpinned by a strong fiscal anchor, that is delivering rapid disinflation and a recovery in activity and social indicators," the IMF said.
"The program supports the next phase of Argentina's homegrown stabilization and reform agenda aimed at entrenching macroeconomic stability, strengthening external sustainability, and unlocking strong and more sustainable growth, while also managing the more challenging global backdrop."
The fund's long-awaited announcement offered a lifeline to President Javier Milei, who has cut inflation and stabilized Argentina's troubled economy with a free-market austerity agenda.
Argentina desperately needed the deal to unlock investment-blocking capital controls, bolster its depleted foreign currency reserves and come out of a tight inflationary pinch.
Fears grew that if the government failed to secure an IMF loan, hard-won austerity measures would veer off-track and leave Argentina, once again, unable to service its huge debts or pay its import bills.
The fresh cash gives Milei a serious shot at easing Argentina's strict foreign exchange controls, which could help convince markets of his program's sustainability.
Argentina is the IMF's largest debtor and owes more than $44 billion to the fund. The new loans are now used to cover interest payments to the IMF and increase the central bank's currency reserves.
Milei, who took office in December 2023, has initiated radical reforms in the first months after assuming the post, as thousands of civil servants were dismissed and social programs were massively cut.
Critics note that the poor have paid the highest price for Argentina's now rosy-looking macroeconomic indicators. Retirees have been protesting weekly against low pensions, with the decreases accounting for the largest share of Milei's budget cuts. Major labor unions announced a 36-hour general strike starting Wednesday in solidarity.
Still, Milei has maintained solid approval ratings, a surprise that analysts attribute to his success in driving down inflation, which dropped to 118% from 211% annually during his first year in office.
While his austerity measures significantly reduced inflation, they also stifled the economy and sparked mass protests nationwide. In this once-affluent country, more than 50% of people now live below the poverty line.
