Argentina and the IMF: Can This Marriage Be Saved?

[earlyretirement]

The IMF has confirmed that formal talks are underway for a new loan program for Argentina. The IMF's director of Communications, Julie Kozack confirmed the formal meeting.

We should see billions more coming in the next few months.

https://twitter.com/x/status/1869792887564841233

 

[Avocado]

The IMF has confirmed that formal talks are underway for a new loan program for Argentina. The IMF's director of Communications, Julie Kozack confirmed the formal meeting.

We should see billions more coming in the next few months.

https://twitter.com/x/status/1869792887564841233

This is terrible news!! Argentina does NOT need more debt. This is what got us into this mess in the first place. The rich just get richer and the poor get poorer and the middle class is disappearing under Milei.

 

[Betsy Ross]

The IMF has confirmed that formal talks are underway for a new loan program for Argentina. The IMF's director of Communications, Julie Kozack confirmed the formal meeting.

We should see billions more coming in the next few months.

https://twitter.com/x/status/1869792887564841233

Looks like a new deal is a few months away.

Milei, Caputo increasing bullish as they outline new IMF deal timeline

Argentina eyes fresh accord with the International Monetary Fund in the first third of next year, with President Milei confident of strong support, both at the Fund and on trade, from incoming US president Donald Trump.

www.batimes.com.ar

 

[Vince]

This is terrible news!! Argentina does NOT need more debt. This is what got us into this mess in the first place. The rich just get richer and the poor get poorer and the middle class is disappearing under Milei.

I am with you @Avocado I don't think Argentina should be taking on so much debt again. I worry about that. Caputo seems to be pushing that this will happen in the first quarter but I have my doubts. I lot of things can happen before then. I am also doubtful on the growth targets but I hope I am wrong.

 

[Finance Prof]

IMF Publishes Grim Evaluation of Argentina’s $44 Billion Deal

IMF Publishes Grim Evaluation of Argentina’s $44 Billion Deal

(Bloomberg) -- The International Monetary Fund published a somber review of its most recent program that failed in Argentina, finishing a technical step needed before President Javier Milei negotiates a new agreement this year.Most Read from BloombergWhat Robotaxis Brought San FranciscoA...

finance.yahoo.com

 

[CraigM]

IMF Publishes Grim Evaluation of Argentina’s $44 Billion Deal

IMF Publishes Grim Evaluation of Argentina’s $44 Billion Deal

(Bloomberg) -- The International Monetary Fund published a somber review of its most recent program that failed in Argentina, finishing a technical step needed before President Javier Milei negotiates a new agreement this year.Most Read from BloombergWhat Robotaxis Brought San FranciscoA...

finance.yahoo.com

The US is by far the biggest contributor to the IMF and Trump will be more hands-on than most presidents, pushing his weight around. So I suspect Argentina will get what it wants in the end. This is again where relationships matter.

 

[Piranha]

The US is by far the biggest contributor to the IMF and Trump will be more hands-on than most presidents, pushing his weight around. So I suspect Argentina will get what it wants in the end. This is again where relationships matter.

Yep. USA has the most weight. This is like Dejavue. Trump was President when the last big IMF deal was pushed through.

 

[Uncle Wong]

The US is by far the biggest contributor to the IMF and Trump will be more hands-on than most presidents, pushing his weight around. So I suspect Argentina will get what it wants in the end. This is again where relationships matter.

I'm not convinced that more debt is what Argentina needs. Countries can get too dependent on debt and change course. It doesn't sound like Argentina is going to stop currency controls even after getting more $$$$.

 

[daveholman]

I'm not convinced that more debt is what Argentina needs. Countries can get too dependent on debt and change course. It doesn't sound like Argentina is going to stop currency controls even after getting more $$$$.

I'm confused as to whether Milei/Caputo are actually trying to borrow more money, or just to renegotiate the terms of the existing debt. What with the Country Risk Index dropping like it has, they should be offered better terms on the loans they have. More debt is not a good idea. No person or country ever borrowed their way to wealth.

 

[CraigM]

I'm confused as to whether Milei/Caputo are actually trying to borrow more money, or just to renegotiate the terms of the existing debt. What with the Country Risk Index dropping like it has, they should be offered better terms on the loans they have. More debt is not a good idea. No person or country ever borrowed their way to wealth.

IMF in talks with Argentina on loan to succeed US$44-billion deal

International Monetary Fund confirms it has formally opened talks with President Javier Milei's government over a new loan programme to replace its existing US$44-billion deal.

batimes.com.ar

"A central question in negotiations on Argentina’s next IMF programme is whether the lender will provide Milei with additional financing beyond rolling over the US$44-billion burden — and how much. The libertarian president floated US$15 billion earlier this year but hasn’t referenced the figure recently. Caputo said this week that he anticipates fresh funds to be part of the programme."

 

[Vero]

I'm confused as to whether Milei/Caputo are actually trying to borrow more money, or just to renegotiate the terms of the existing debt. What with the Country Risk Index dropping like it has, they should be offered better terms on the loans they have. More debt is not a good idea. No person or country ever borrowed their way to wealth.

They are trying to do both. They want to renegotiate the terms but according to the local papers they are trying to get about $12 billion more in extra funds. I do not want to see Argentina take on more debt. Next generation is going to get stuck with all of this debt. It is wrong. Milei was so dead set against the IMF debt before but it seems like Caputo is running the show.

The IMF said before Argentina had to remove cepo but in the news they are saying now Argentina will not end cepo until after the elections. Most locals do not want more debt from IMF. I do not trust the IMF.

 

[Larry]

I'm confused as to whether Milei/Caputo are actually trying to borrow more money, or just to renegotiate the terms of the existing debt. What with the Country Risk Index dropping like it has, they should be offered better terms on the loans they have. More debt is not a good idea. No person or country ever borrowed their way to wealth.

It is just comical that the IMF is going to loan more money. Argentina's net reserves are still negative. If you look at the numbers even with the so called successful tax amnesty and bringing in billionsof dollars the government can't seem to pay down any principal of their loan balance. they just keep to be kicking the can down the road. It doesn't seem like they will ever pay this IMF debt off. Now they are going to take on even more billions. I can't understand banks and creditors that are lined up to extend even more credit. This has played out before with Macri and it didn't end up well.

 

[IrishLad]

I'm confused as to whether Milei/Caputo are actually trying to borrow more money, or just to renegotiate the terms of the existing debt. What with the Country Risk Index dropping like it has, they should be offered better terms on the loans they have. More debt is not a good idea. No person or country ever borrowed their way to wealth.

Milei's early days he shunned taking on more debt. I also didn't know they were trying to get more. I just thought they were extending the terms. Without lifting capital controls why would companies want to do business here? They will be stuck. I also thought the IMF had a condition of giving more money if they stopped capital controls but that seems to have gone out the window.

 

[Problema]

It is just comical that the IMF is going to loan more money. Argentina's net reserves are still negative. If you look at the numbers even with the so called successful tax amnesty and bringing in billionsof dollars the government can't seem to pay down any principal of their loan balance. they just keep to be kicking the can down the road. It doesn't seem like they will ever pay this IMF debt off. Now they are going to take on even more billions. I can't understand banks and creditors that are lined up to extend even more credit. This has played out before with Macri and it didn't end up well.

I just don't understand why the IMF would want to loan more money. Can anyone explain how Argentina is going to really improve doing more of the same?

• The Tax Amnesty is over, there are no more dollars incoming unless they do another amnesty.
• The IMF says continued currency controls = No more money
• Brazil has devalued the Real, making its exports cheaper
  • Brazil exports the same things as Argentina does, but much cheaper now
• Instead of growing the BCRA reserves, we have net negative reserves because the few dollars Argentina gets its hands on are used by Milei and Caputo to intervene in the MEP and CCL markets, just like Cristina/Alberto/Massa
• Everything in Argentina is expensive in pesos and dollars, so people buy things abroad/don't buy things at all, and VAT revenue collapses
• Inflation refuses to go below 2-3% a month, even when Milei has nuked the macro economy. There are no more tricks to play, it just continues humming along despite being in a recession
• The carry trade is slowing down as it's expected that there will be another rate cut at the BCRA this month, so even less fun money
• Milei keeps talking about a FTA with the US, despite the fact we're in Mercosur, AND, even more importantly, Trump has spent the last decade railing against them as candidate and president
• Even the right-wing economists are saying the dollar is artificially cheap, and say it should be closer to $1,600

God help you if you're the one holding the bag when this thing collapses because if you ask me, we have a Madoff scenario, and those who can are getting their money out of the country while they can, not investing for the long term.

 

[CraigM]

I hear what you're saying but try to remember Argentina has a lot of great assets as well. It has a serious liquidity problem for the next few years that requires outside help, but if they can get to the other side of it while building a functioning economy, then the potential is quite large and will make these problems seem trivial in hindsight. Bigger question to me is whether locals are willing to see it through, or do they give up halfway and vote in the next socialist promising freebies.

One point I will disagree on is people getting their money out. You only need to look at the local stock market to know that money is going into Argentina, not out.

 

[Finance Prof]

I hear what you're saying but try to remember Argentina has a lot of great assets as well. It has a serious liquidity problem for the next few years that requires outside help, but if they can get to the other side of it while building a functioning economy, then the potential is quite large and will make these problems seem trivial in hindsight. Bigger question to me is whether locals are willing to see it through, or do they give up halfway and vote in the next socialist promising freebies.

One point I will disagree on is people getting their money out. You only need to look at the local stock market to know that money is going into Argentina, not out.

I agree with Craig. Tons of liabilities. No one is sugarcoating that fact that a lot of debt. But the assets Argentina have are massive and can dig themselves out of this hole but it will take time. Agree this all depends on how willing the locals are to wait. I don't see any evidence that people want to go back to what we had before. In fact, the majority of the people I hear complaining are expats. Some wealthy locals also that benefit more with strong blue dollar and weak peso but many I speak to said things are improving.

 

[old fart]

I just don't understand why the IMF would want to loan more money. Can anyone explain how Argentina is going to really improve doing more of the same?

• The Tax Amnesty is over, there are no more dollars incoming unless they do another amnesty.
• The IMF says continued currency controls = No more money
• Brazil has devalued the Real, making its exports cheaper
  • Brazil exports the same things as Argentina does, but much cheaper now
• Instead of growing the BCRA reserves, we have net negative reserves because the few dollars Argentina gets its hands on are used by Milei and Caputo to intervene in the MEP and CCL markets, just like Cristina/Alberto/Massa
• Everything in Argentina is expensive in pesos and dollars, so people buy things abroad/don't buy things at all, and VAT revenue collapses
• Inflation refuses to go below 2-3% a month, even when Milei has nuked the macro economy. There are no more tricks to play, it just continues humming along despite being in a recession
• The carry trade is slowing down as it's expected that there will be another rate cut at the BCRA this month, so even less fun money
• Milei keeps talking about a FTA with the US, despite the fact we're in Mercosur, AND, even more importantly, Trump has spent the last decade railing against them as candidate and president
• Even the right-wing economists are saying the dollar is artificially cheap, and say it should be closer to $1,600

God help you if you're the one holding the bag when this thing collapses because if you ask me, we have a Madoff scenario, and those who can are getting their money out of the country while they can, not investing for the long term.

I think the IMF is going to have egg on it's face because they told Argentina they won't lend more money unless they get rid of the currency controls. But my friends here tell me that there is no way Milei will end currency controls before the elections. So that means the peso will be overinflated for most of the rest of the year. And now IMF is still going to loan more money and allow them to do the carry trade.