Argentina and the IMF: Can This Marriage Be Saved?

[Avocado]

The problem is that if Argentina gets its hands on billions more they will just waste it meddling with the currency. Do you believe that is a good use of the funds @CraigM?

Luckily it sounds like the IMF won't give more money if Argentina does not agree to lift the cepo.

Javier Milei’s quest to defuse Argentina’s currency control bomb

Libertarian president aims to secure IMF deal to help prepare for end of fixed exchange rate

www.ft.com

Everyone knows they can not lift the currency controls any time soon. Read from that article. Why would foreign company want to come to Argentina. Look at all foreign companies that cannot transfer their profits out of Argentina. $10 billion worth that will immediately get out once cepo is ended. Many local also will buy dollar.

Financial Times article above


Others regulations are harder to cut. A restriction that prevents multinational companies from transferring profits overseas, for example, is keeping some $10bn worth of pesos in Argentina that would be probably converted to dollars if the rule was scrapped, according to consultancy Fundación Capital. Central bank president Santiago Bausili said in November that such stockpiles were “the main impediment to lifting controls” and that the government was prioritising restrictions on future flows of money.

 

[VINO]

Everyone knows they can not lift the currency controls any time soon. Read from that article. Why would foreign company want to come to Argentina. Look at all foreign companies that cannot transfer their profits out of Argentina. $10 billion worth that will immediately get out once cepo is ended. Many local also will buy dollar.

Financial Times article above


Others regulations are harder to cut. A restriction that prevents multinational companies from transferring profits overseas, for example, is keeping some $10bn worth of pesos in Argentina that would be probably converted to dollars if the rule was scrapped, according to consultancy Fundación Capital. Central bank president Santiago Bausili said in November that such stockpiles were “the main impediment to lifting controls” and that the government was prioritising restrictions on future flows of money.

I knew the cepo was bad but didn't know it was that bad. 10 billion dollars worth of pesos that all will be racing to the exits once cepo ends. Seems criminal that Argentina wouldn't let these multinational companies transfer their profits out of Argentina. Sounds like something Venezuela did.

 

[Blockchain]

I knew the cepo was bad but didn't know it was that bad. 10 billion dollars worth of pesos that all will be racing to the exits once cepo ends. Seems criminal that Argentina wouldn't let these multinational companies transfer their profits out of Argentina. Sounds like something Venezuela did.

But sounds like he is only taking action that he can take. He isn't the one that started the controls. And it sounds like he is trying to lift them as fast as he can. So everyone saying the currency will devalue once they do the cepo are probably right if that many billions need to exit. No wonder he needs $11 billion from the IMF!

 

[Jenn]

I knew the cepo was bad but didn't know it was that bad. 10 billion dollars worth of pesos that all will be racing to the exits once cepo ends. Seems criminal that Argentina wouldn't let these multinational companies transfer their profits out of Argentina. Sounds like something Venezuela did.

I may be a dumb blonde but why in the world would a multinational company even think about coming to Argentina. If the ones that already here and had profits can't get them out of Argentina what incentive do they have to try to do the same thing? Sure Milei may have a different plan but if you look and he still can't get rid of currency controls over a year later from taking office sounds like even if he removed currency controls they could come right back. Seems risky to me.

 

[Uncle Wong]

I may be a dumb blonde but why in the world would a multinational company even think about coming to Argentina. If the ones that already here and had profits can't get them out of Argentina what incentive do they have to try to do the same thing? Sure Milei may have a different plan but if you look and he still can't get rid of currency controls over a year later from taking office sounds like even if he removed currency controls they could come right back. Seems risky to me.

The RIGI big investments have some protections against currency controls. But the wildcard are smaller companies. The $10 Billion USD will race to exit Argentina once the cepo ends. There isn't a guarantee that companies will invest in Argentina and replace those funds. Macri got billions in loans waiting for all the investments that never turned out to appear. This could end up being the same thing.

 

[Surfer]

Everyone knows they can not lift the currency controls any time soon. Read from that article. Why would foreign company want to come to Argentina. Look at all foreign companies that cannot transfer their profits out of Argentina. $10 billion worth that will immediately get out once cepo is ended. Many local also will buy dollar.

Financial Times article above


Others regulations are harder to cut. A restriction that prevents multinational companies from transferring profits overseas, for example, is keeping some $10bn worth of pesos in Argentina that would be probably converted to dollars if the rule was scrapped, according to consultancy Fundación Capital. Central bank president Santiago Bausili said in November that such stockpiles were “the main impediment to lifting controls” and that the government was prioritising restrictions on future flows of money.

Sounds like Milei knows that lifting the Cepo will bring a devaluation of the peso and inflation come back. Sounds like a tough situation.

 

[Pobre Luis]

IMF isn't dumb. They aren't going to just hand over $11 billion only to have Argentina blow it on interventions.

The IMF officials returned to Washington with more questions than answers, in addition to the information on their PCs that the interventions of the BCRA by selling dollars in the CCL had continued during the days they remained in Buenos Aires.

Sources linked to international financial organizations say that the IMF already has a prevailing opinion that the Argentine government will not be disbursed the amount requested (between 11 and 15 billion dollars), but at most, a figure that will allow it to meet the year's payments to the IMF and perhaps to other international organizations. That is, between two and four billion dollars.

Otro tropezón del plan ecónómico | Escaso resultado por la baja de retenciones. El FMI restringe su apoyo

La liquidación de exportaciones no fue la esperada y empiezan los cortocircuitos. El FMI limitará su respaldo financiero.

www-pagina12-com-ar.translate.goog

 

[Pobre Luis]

I may be a dumb blonde but why in the world would a multinational company even think about coming to Argentina. If the ones that already here and had profits can't get them out of Argentina what incentive do they have to try to do the same thing? Sure Milei may have a different plan but if you look and he still can't get rid of currency controls over a year later from taking office sounds like even if he removed currency controls they could come right back. Seems risky to me.

You aren't dumb. Multinational companies aren't going to invest in Argentina if they can't realize profits and get their cash out of Argentina. Some companies have announced big investments with the RIGI program but even those probably won't rush in the funds now. Companies will come here only when the cepo has ended.

 

[Larry]

IMF is probably looking at all the scams of Milei and so relieved they didn't put in more money. Who knows. With Milei maybe the money would have gone into Libra. 🤣

 

[Avocado]

IMF is probably looking at all the scams of Milei and so relieved they didn't put in more money. Who knows. With Milei maybe the money would have gone into Libra. 🤣

Yes when I saw the news of the Milei Libra fraud I was laughing thinking about the IMF. They probably are relieved they did not throw away money in Argentina. Who knows what they would spend the money on.

 

[import export]

Yes when I saw the news of the Milei Libra fraud I was laughing thinking about the IMF. They probably are relieved they did not throw away money in Argentina. Who knows what they would spend the money on.

Not sure how this will affect the timing of IMF releasing more funds. I would think automatically they would need to delay funds to see how this plays out. Or if there will be eventual impeachment hearings against Milei.

 

[Finance Prof]

Not sure how this will affect the timing of IMF releasing more funds. I would think automatically they would need to delay funds to see how this plays out. Or if there will be eventual impeachment hearings against Milei.

Caputo is saying that this crypto scandal is not going to cause problems with the IMF. He probably would say that no matter what but if anything it might be better for the IMF as they know there is more scrutiny on what they use the funds for now with everyone watching Milei.

 

[earlyretirement]

Caputo is saying that this crypto scandal is not going to cause problems with the IMF. He probably would say that no matter what but if anything it might be better for the IMF as they know there is more scrutiny on what they use the funds for now with everyone watching Milei.

Yes the IMF will still dole out between $8 to $10 Billion more. That is coming soon.

 

[Bharat]

Caputo is saying that this crypto scandal is not going to cause problems with the IMF. He probably would say that no matter what but if anything it might be better for the IMF as they know there is more scrutiny on what they use the funds for now with everyone watching Milei.

But I thought IMF doesn't want Argentina to use funds to manipulate the market but it look like it still going on.

Dólar: el Banco Central debió vender reservas e intensificar sus esfuerzos para controlar a los dólares financieros

Sacrificó US$15 millones y gastó una suma que en el mercado descuentan fue mucho más importante en intervenciones sobre los dólares financieros

www.lanacion.com.ar

 

[CraigM]

https://www.reuters.com/world/what-are-imf-world-bank-what-happens-if-us-pulls-support-2025-02-27/

Decent article explaining the IMF and World Bank, what if US pulls out, etc. Pie charts need some work and it doesn't show who actually pays their share (many don't fulfill their obligations and the US historically paid a lot more than their 16% vote). Also a good chart of total IMF credit outstanding.

 

[James Bond]

https://www.reuters.com/world/what-are-imf-world-bank-what-happens-if-us-pulls-support-2025-02-27/

Decent article explaining the IMF and World Bank, what if US pulls out, etc. Pie charts need some work and it doesn't show who actually pays their share (many don't fulfill their obligations and the US historically paid a lot more than their 16% vote). Also a good chart of total IMF credit outstanding.


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Wow I knew Argentina was their biggest loan but didn't know by that much. @CraigM if the IMF pulled out do you think they would go at it alone and help Argentina? That doesn't seem likely to me. Especially with DOGE wanting to help American and their America first attitude.

 

[CraigM]

Wow I knew Argentina was their biggest loan but didn't know by that much. @CraigM if the IMF pulled out do you think they would go at it alone and help Argentina? That doesn't seem likely to me. Especially with DOGE wanting to help American and their America first attitude.

Do you mean if the US pulled out of the IMF?

 

[Avocado]

Do you mean if the US pulled out of the IMF?

What would happen if the USA pulled out? I don't think that would be likely but you never know with Trump! I guess we would soon see how good of friends Trump is with Milei. I doubt USA has appetite to give Argentina billions of dollars alone.

 

[CraigM]

What would happen if the USA pulled out? I don't think that would be likely but you never know with Trump! I guess we would soon see how good of friends Trump is with Milei. I doubt USA has appetite to give Argentina billions of dollars alone.

The US has a 16% vote but pays much more than that because (like all these global organizations) many member countries don't pay their bills and for some reason that's been acceptable until now. So I think the US will get their way.

 

[Finance Prof]

The US has a 16% vote but pays much more than that because (like all these global organizations) many member countries don't pay their bills and for some reason that's been acceptable until now. So I think the US will get their way.

Trump always seems to get his way one way or another....