LatinNews Daily - 09 January 2024

ARGENTINA: Caputo and Posse meet IMF team

On 8 January Argentina’s economy minister, Luis Caputo, and cabinet chief Nicolás Posse met a visiting team from the International Monetary Fund (IMF) in the Casa Rosada presidential palace to discuss the country’s debt restructuring accord and the release of fresh funds as sizeable repayments fall due.

Analysis:

This was the first high-level meeting since the arrival of the IMF team after several days of technical meetings. The government is keen to unblock the US$3.3bn withheld by the IMF since November last year to meet more than US$2.6bn of repayments to the multilateral due over the next few weeks. It is hopeful that the IMF will look favourably on its opening moves to slash the fiscal deficit and reduce public expenditure. But the far-ranging proposals contained within the government’s omnibus reform bill are meeting opposition in congress, where President Javier Milei’s far-right personalist party La Libertad Avanza (LLA) has a weak presence, and its passage is far from assured.

• The government is trying to ratchet up the pressure on congress to approve the omnibus reform bill, arguing, among other things, that it is essential to fulfil commitments in the IMF accord. But the omnibus bill is highly contentious, going way beyond economic matters, and also requiring that congress award Milei emergency powers to legislate by decree for the next two years.
• Milei made it clear on 7 January that he was not prepared to engage in “negotiations” with opposition parties in congress over any aspect of the omnibus bill, although he agreed to “accept suggestions” to improve it, which in practice looks like a matter of semantics. Martín Menem, the LLA president of the lower chamber of congress, added yesterday that the ruling party was “prepared to listen”.

Looking Ahead: Meetings between the IMF team, led by Luis Cubeddu, Assistant Director in the IMF’s Western Hemisphere Department, Ben Kelmanson, the IMF’s senior resident representative in Argentina, and Ashvin Ahuja, the mission chief for Argentina, will continue in the coming days. Meanwhile, the lower chamber of congress is beginning to debate the omnibus bill, with various cabinet ministers due to appear before deputies to discuss the reform proposals.