Argentina and the IMF: Can This Marriage Be Saved?

[Vince]

2025 will be interesting to say the least. Maybe Argentina will get lucky with the Saudi's or some wealthy Middle Eastern nation that have several billion $$$$ to spare.

 

[Finance Prof]

2025 will be interesting to say the least. Maybe Argentina will get lucky with the Saudi's or some wealthy Middle Eastern nation that have several billion $$$$ to spare.

I hope so. Doubt the IMF will lend more. Look at the countries with the biggest debt to the IMF. Puts things in perspective. Look at all the maturities due in 2025. Not going to be pretty. The longer they wait to get rid of the CEPO the worse it's going to be.

Argentina needs to get off its dependence on the IMF ASAP.

 

[Piranha]

It sounds like the IMF had some good meetings with Argentina. I'm worried about Argentina just continuing to add billions more in debt. That is what Macri did and it crippled Argentina.

IMF to think about what is best for Argentina, says Georgieva

Argentina's Economy Minister Luis Toto Caputo met Thursday in Washington DC with International Monetary Fund (IMF) Managing Director Kristalina Georgieva, who then announced that “we have an objective, which is to think together, as a single team, what is best for Argentina”.

en.mercopress.com

 

[Finance Prof]

The IMF predicts Argentina will have the biggest growth out of all the Latin American economies for 2025.

 

[Digital Nomad]

I read the IMF is close to giving Argentina more money. Will they have conditions on this loan?

 

[Finance Prof]

I read the IMF is close to giving Argentina more money. Will they have conditions on this loan?

Most likely they will have conditions on giving more cash. Probably getting rid of the cepo and devaluating the over valued peso.

 

[GlasgowJohn]

Most likely they will have conditions on giving more cash. Probably getting rid of the cepo and devaluating the over valued peso.

Devaluation is the big problem. We all know that the Peso is overvalued but also that devaluation will bring back inflation.

But maybe Caputo and his team will have a magic solution....

 

[Larry]

Devaluation is the big problem. We all know that the Peso is overvalued but also that devaluation will bring back inflation.

But maybe Caputo and his team will have a magic solution....

This is what people don't understand that keep saying inflation is going down. It is but it is not real. The peso should not be as strong as it is. Once it gets devaluated which must happen, prices will go back up and inflation rears it's ugly head again. Do you see any way to avoid this @GlasgowJohn? I sure don't.

 

[Betsy Ross]

Devaluation is the big problem. We all know that the Peso is overvalued but also that devaluation will bring back inflation.

But maybe Caputo and his team will have a magic solution....

I really would prefer not to see another HUGE loan package from the IMF. It's what got us into this mess in the first place. Wouldn't mind seeing a restructuring of the existing debt with payments extended or something but I think it would be horrible to take on lots of new debt.

Agree the peso is overvalued. How do we know how overvalued it is? Everytime I ask someone I get a different answer. Some of my banker friends tell me a healthy exchange rate is about 1,700 to $1. Others tell me it should be well over 2000. @GlasgowJohn what do you think it should be at? And once the Cepo happens will it get there?

 

[CraigM]

My very amateur guess is the peso will remain strong vs the dollar until the amnesty ends and all those dollars flooding the system get absorbed. You had a shortage of dollars for a long time and then suddenly there was a wild excess of them.

 

[GraceH]

My very amateur guess is the peso will remain strong vs the dollar until the amnesty ends and all those dollars flooding the system get absorbed. You had a shortage of dollars for a long time and then suddenly there was a wild excess of them.

Probably correct. My friend works for a large bank in BA and he said that money is still coming in. People are paying a % now but money is still coming in because people want to invest it in properties or he said some locals are finally entering the stock market which he said they never did before.

I asked him when the peso will devalue a little and he said the same as you Craig. He said once the amnesty ends. But he said the government might extend it.

 

[GlasgowJohn]

This is what people don't understand that keep saying inflation is going down. It is but it is not real. The peso should not be as strong as it is. Once it gets devaluated which must happen, prices will go back up and inflation rears it's ugly head again. Do you see any way to avoid this @GlasgowJohn? I sure don't.

@Larry , I dont think it is possible but I didn't think they would be able to reduce the value of the USD. I thought they might be able to stabilize things for a few months.

But they have surprised everyone I think.

 

[CraigM]

Probably correct. My friend works for a large bank in BA and he said that money is still coming in. People are paying a % now but money is still coming in because people want to invest it in properties or he said some locals are finally entering the stock market which he said they never did before.

I asked him when the peso will devalue a little and he said the same as you Craig. He said once the amnesty ends. But he said the government might extend it.

Thanks Grace, that certainly adds color to it. Currency speculation is a tough game because while fundamentals will determine prices in the long run, in the short run it is primarily about asset flows. Argentina's dollar supply went from dry as a desert to a monsoon almost overnight.

 

[Vero]

@Larry , I dont think it is possible but I didn't think they would be able to reduce the value of the USD. I thought they might be able to stabilize things for a few months.

But they have surprised everyone I think.

I gave up trying to guess what happens. My entire family only saves in dollars. All our life. We have never saved in pesos but this is the first time we take a portion and save in pesos while the government is paying high interest rates.

@Larry , I dont think it is possible but I didn't think they would be able to reduce the value of the USD. I thought they might be able to stabilize things for a few months.

But they have surprised everyone I think.

I am like you GlasgowJohn. I didn't think it was possible to reduce the value of USD especially with Trump elected now and value of dollar stronger all around the world. Everyone is surprised. Do you save your money in pesos now? My sister owns a property and first time she ever preferred to do a rental contract in pesos vs. dollars. Before she only accepted dollars but now she prefers pesos with inflation adjustments. We are living in different times.

Thanks Grace, that certainly adds color to it. Currency speculation is a tough game because while fundamentals will determine prices in the long run, in the short run it is primarily about asset flows. Argentina's dollar supply went from dry as a desert to a monsoon almost overnight.

Yes my banker said it's all guessing because things can change quickly. Also if IMF gives more money and cepo is lifted I don't know if the dollar and peso will really trade freely or will the government still intervene?

 

[Digital Nomad]

Devaluation is the big problem. We all know that the Peso is overvalued but also that devaluation will bring back inflation.

But maybe Caputo and his team will have a magic solution....

Is there anyone that thinks the peso isn't way overvalued? People complaining everyday. My novia's family all voted for Milei but they are complaining about value of peso. Their savings are all in dollars.

Thanks Grace, that certainly adds color to it. Currency speculation is a tough game because while fundamentals will determine prices in the long run, in the short run it is primarily about asset flows. Argentina's dollar supply went from dry as a desert to a monsoon almost overnight.

I think that is the 1 million $ question. The amnesty definitely helped and for the most part people are keeping their money in the banks and not withdrawing. My novia's cousins all are buying pozo properties now with the amnesty they declared. Lots of my novia's friends are also buying right now. Several with mortgages.

 

[Vince]

@Larry , I dont think it is possible but I didn't think they would be able to reduce the value of the USD. I thought they might be able to stabilize things for a few months.

But they have surprised everyone I think.

I never thought I'd see the USD weaken so quickly but Milei and team are doing a great job!

Is there anyone that thinks the peso isn't way overvalued? People complaining everyday. My novia's family all voted for Milei but they are complaining about value of peso. Their savings are all in dollars.


I think that is the 1 million $ question. The amnesty definitely helped and for the most part people are keeping their money in the banks and not withdrawing. My novia's cousins all are buying pozo properties now with the amnesty they declared. Lots of my novia's friends are also buying right now. Several with mortgages.

Yes. My wife's family also brought in $$$ into Argentina with the blanqueo. I was surprised to hear many brought in much higher than the $100,000 free. Several brought in much higher. They think this time is different with Milei.

 

[Larry]

NO to more IMF debt!

 

[Cardiac Arrest]

My very amateur guess is the peso will remain strong vs the dollar until the amnesty ends and all those dollars flooding the system get absorbed. You had a shortage of dollars for a long time and then suddenly there was a wild excess of them.

This is my guess too. People have until the end of the year to still bring in and declare funds. I have some friends that didn't. I asked them why they wouldn't do it before! They would have paid 0% on the first $100k and they said they didn't trust Milei but now they are seeing the recovery and want to bring it in now. Some also want to buy bonds and invest and the funds are just sitting in cash so they couldn't invest it but they will be able to once they do it.

 

[earlyretirement]

NO to more IMF debt!

Well this will not happen @Larry. It is not a question IF Argentina will get more billions from the IMF. It's just a question of how much. If Argentina had it's way they want to borrow $26.26 Billion more. I doubt the IMF will give that much but definitely more is coming.

Milei se acerca al FMI y habilita un intervencionismo light

El país busca un nuevo acuerdo por unos US$26.260 millones, de los cuales una parte importante podría desembolsarse apenas firmado el programa; en el inicio de 2025, el Gobierno avanzará con medidas contra sectores que considera que no funcionan como debieran en un mercado libre

www.lanacion.com.ar

 

[Blockchain]

Well this will not happen @Larry. It is not a question IF Argentina will get more billions from the IMF. It's just a question of how much. If Argentina had it's way they want to borrow $26.26 Billion more. I doubt the IMF will give that much but definitely more is coming.

Milei se acerca al FMI y habilita un intervencionismo light

El país busca un nuevo acuerdo por unos US$26.260 millones, de los cuales una parte importante podría desembolsarse apenas firmado el programa; en el inicio de 2025, el Gobierno avanzará con medidas contra sectores que considera que no funcionan como debieran en un mercado libre

www.lanacion.com.ar

Holy crap! I didn't think they were trying to get that much more debt. Do they really need that much more $$$$?