IMF Agreement: The Government Will Send a DNU to Congress to Obtain Support

[earlyretirement]

IMF Agreement: The Government Will Send a DNU to Congress to Obtain Support

The government of Javier Milei is considering approving the new agreement with the International Monetary Fund (IMF) through a Decree of Necessity and Urgency (DNU) instead of a bill. This strategy aims to bypass a possible blockade by the Kirchnerism in the Senate.

Key points of the agreement and the situation:

The IMF could lend Argentina up to US$20 billion, including US$8 billion in fresh funds.

The agreement seeks to recapitalize the Central Bank and reduce Treasury debt.

Capital payments to the IMF resume in September 2026.

The IMF has expressed that "strong ownership and broad support are key to the program's success."

However, the organization clarified that obtaining Congressional support is a decision for Argentine authorities according to domestic legislation.

The government argues that the agreement should not be considered as "new indebtedness" but as refinancing of existing debts.

The 2021 law establishes that any credit operation with the IMF requires Congressional approval.
Some economists believe that the use of a DNU would not be valid in this context.

The Minister of Economy, Luis Caputo, stated that the agreement will be finalized in the first quarter of 2025 and that it will not involve a devaluation. The decision to use a DNU instead of a bill generates debate about the legality and legitimacy of the process, as well as the role of Congress in approving agreements with the IMF.

 

[Wally]

Seems like this will be great for Argentina. It's what they needed. Hopefully they will get rid of the cepo soon.

 

[Larry]

IMF Agreement: The Government Will Send a DNU to Congress to Obtain Support

The government of Javier Milei is considering approving the new agreement with the International Monetary Fund (IMF) through a Decree of Necessity and Urgency (DNU) instead of a bill. This strategy aims to bypass a possible blockade by the Kirchnerism in the Senate.

Key points of the agreement and the situation:

The IMF could lend Argentina up to US$20 billion, including US$8 billion in fresh funds.

The agreement seeks to recapitalize the Central Bank and reduce Treasury debt.

Capital payments to the IMF resume in September 2026.

The IMF has expressed that "strong ownership and broad support are key to the program's success."

However, the organization clarified that obtaining Congressional support is a decision for Argentine authorities according to domestic legislation.

The government argues that the agreement should not be considered as "new indebtedness" but as refinancing of existing debts.

The 2021 law establishes that any credit operation with the IMF requires Congressional approval.
Some economists believe that the use of a DNU would not be valid in this context.

The Minister of Economy, Luis Caputo, stated that the agreement will be finalized in the first quarter of 2025 and that it will not involve a devaluation. The decision to use a DNU instead of a bill generates debate about the legality and legitimacy of the process, as well as the role of Congress in approving agreements with the IMF.

View attachment 8851

This is against the law. They can't do this. I am against more IMF debt. How the hell will they pay all of this off? They can't even pay back the debt they have now. Foreign investments are not coming.

 

[Digital Nomad]

Doubt they can stop it.

El Gobierno emitirá un DNU para sellar el acuerdo con el FMI y lo enviará al Congreso para su ratificación

La Casa Rosada confirmó esa modalidad este jueves por la tarde; buscará sortear un eventual bloqueo del kirchnerismo a un proyecto de ley en el Senado; justificó la medida en la necesidad de avanzar con la “desinflación” y “liberar las restricciones cambiarias”

www.lanacion.com.ar

 

[Finance Prof]

I just hope that they get rid of the cepo. It would be great to see them do this earlier than the mid term elections.

Wall St sees Argentina getting up to US$20 billion in IMF deal

Negotiations between Milei’s government and the IMF appear to be nearing the final stages.

www.batimes.com.ar

 

[Larry]

This is completely illegal. This is Milei's problem. He breaks the law. Just a few days ago he urged Congress to support him and then a few days later he breaks the law again!

Milei issues emergency decree mandating IMF deal approval - Buenos Aires Herald

The surprise move came days after the president called on Congress to support ongoing talks with the lender

buenosairesherald.com

Is he an idiot trying to say there is not going to be more debt! Taking on additional debt is taking on more debt no matter what kind of lies you try to tell.

 

[Blockchain]

This is completely illegal. This is Milei's problem. He breaks the law. Just a few days ago he urged Congress to support him and then a few days later he breaks the law again!

Milei issues emergency decree mandating IMF deal approval - Buenos Aires Herald

The surprise move came days after the president called on Congress to support ongoing talks with the lender

buenosairesherald.com

Is he an idiot trying to say there is not going to be more debt! Taking on additional debt is taking on more debt no matter what kind of lies you try to tell.

To me it seems like they have no choice but to take on more debt if they ever want to leave the cepo. But is anyone worried that things aren't getting done legally? Want happens if every President just wants to do what they want and not go through Congress? It might work out in this situation but what happens if all Presidents in the future can just do what they want?

The hilarious thing was on the campaign trail Milei was saying how IMF was evil and taking on more debt was wrong. He sure changed his mind.

 

[JonJLA]

Sounds like $20 Billion is coming which would be great.

Banco suizo prevé que el FMI prestará a Argentina hasta US$20.000 millones en nuevo programa

En una nota a clientes, el UBS dio detalles de las negociaciones entre el Gobierno de Milei y el organismo multilateral. El 30% del nuevo paquete estaría disponible este año

www.bloomberglinea.com

 

[Larry]

Sounds like $20 Billion is coming which would be great.

Banco suizo prevé que el FMI prestará a Argentina hasta US$20.000 millones en nuevo programa

En una nota a clientes, el UBS dio detalles de las negociaciones entre el Gobierno de Milei y el organismo multilateral. El 30% del nuevo paquete estaría disponible este año

www.bloomberglinea.com

NOT great. The IMF gave Argentina a loan before and they can't even pay that back. Many renegotiations and got saddled with debt. We can't even pay this back let alone $10 billion more.

Milei and Caputo just want to use this money to continue with their bicycle financing and continuing to create an artificial unsustainable low dollar. We will end up with more debt and wasting all of this money. This is the same crap the they did in 2017. And the worse thing is it's the same idiots that did it before. Caputo, Bullrich, Petri, Sturzzeneger.

This is crazy the same thing is happening. And the outcome will be the same.

 

[Avocado]

NOT great. The IMF gave Argentina a loan before and they can't even pay that back. Many renegotiations and got saddled with debt. We can't even pay this back let alone $10 billion more.

Milei and Caputo just want to use this money to continue with their bicycle financing and continuing to create an artificial unsustainable low dollar. We will end up with more debt and wasting all of this money. This is the same crap the they did in 2017. And the worse thing is it's the same idiots that did it before. Caputo, Bullrich, Petri, Sturzzeneger.

This is crazy the same thing is happening. And the outcome will be the same.

Agree these people are doing the same thing they did before. Will take a generation or more to pay this off. The government just keeps lying and now they are going to illegally act without going through the appropriate channel. All lies to make excuses to take on more debt.

Milei said on the campaign the IMF loans were wrong. Now he is doing he same thing. This from Cristina is a must read. She is right. His Austrian school experiment failed and now he is going against the things he said were wrong. The funny thing is he try to lie to Argentina with straight face and say all of these billions won't add on more debt! 🤡

 

[Sylvia]

I read the post by Cristina. She makes some good points. I was willing to give Milei a chance but it seems like the further he is going into his Presidency the more he is going against what he said he would do. He is keeping the dollar artificially low and the peso strong. No one can deny that is what is happening. Devaluation will happen. If the IMF isn't demanding it now then it will happen after the elections.

She is also right her husband, Nestor paid off the IMF loan before. He might have had some luck on his side with crop prices but Milei says a lot of stuff that is not true.

 

[Finance Prof]

Agree these people are doing the same thing they did before. Will take a generation or more to pay this off. The government just keeps lying and now they are going to illegally act without going through the appropriate channel. All lies to make excuses to take on more debt.

Milei said on the campaign the IMF loans were wrong. Now he is doing he same thing. This from Cristina is a must read. She is right. His Austrian school experiment failed and now he is going against the things he said were wrong. The funny thing is he try to lie to Argentina with straight face and say all of these billions won't add on more debt! 🤡

Most people no matter what side of the fence they are on agree that peso is too strong. IMF will probably agree to wait until after the mid-term elections to devalue but it will most likely happen. Unfortunately when it does inflation will probably go back up too.

Sturzenegger is doing exactly what he said he would do. I think he is doing a great job deregulating. Caputo is just the same Caputo. He is a numbers guy. He knows finances. Opening the economy is a big positive and until the cepo is lifted foreign companies won't come. The problem is that with an artificially high peso it is dangerous. And without deregulating more labor laws it is going to be tough. Unfortunately no other option other than IMF. Catch 22.

 

[Starfish]

Unfortunately no other option other than IMF. Catch 22.

IMF is the best chance of ending the Cepo. It can't happen without more money. There are companies that are going to cash out as soon as the Cepo is lifted. Probably more than $10 billion are going to race to the exits once the currency controls end. Net reserves are deeply negative by probably $6 billion.

The country in dollars is expensive because of the artificially propped up peso. They need to end the carry trade. They have made some needed changes but in the grand scheme of things not that much has changed. Watch the Netflix show called El Gatopardo. It is very fascinating.

 

[Colin]

Many of the Milei fanboys seem like they would support him no matter what he does or says. Kind of funny that he platformed on closing the Central Bank and now he seems to love it. I wonder if Milei forces the IMF loan with DNU and without support of Congress if a future government coming along and not paying the loan back saying that the IMF knew that it was unconstitutionally accepted. Seems like a can of worms.

 

[earlyretirement]

Rumor is that the IMF does NOT want Argentina using fresh funds to continue to artificially prop up the peso.

El FMI no permitiría que el new money se use para intervenir en el dólar

Caputo dijo que el Fondo nunca pidió una devaluación y que no va a pasar nada con el dólar tras el acuerdo.

eleconomista.com.ar

 

[MikeYoung]

But something I am not clear on. I read articles like this. And in some articles I read there is $5 to $10 billion dollars trapped from foreign companies that aren't able to send the dividends outside of Argentina. Won't all of these companies as soon as the cepo is lifted just flood out of Argentina? I would assume they will pull these billions out of Argentina and send them out?

Why Milei Can't Lift Argentina's Currency Controls Any Time Soon

Javier Milei had big, ambitious goals before he took over as Argentina’s president. One of them: getting rid of the country’s currency controls. But, to the dismay …

financialpost.com

 

[Finance Prof]

But something I am not clear on. I read articles like this. And in some articles I read there is $5 to $10 billion dollars trapped from foreign companies that aren't able to send the dividends outside of Argentina. Won't all of these companies as soon as the cepo is lifted just flood out of Argentina? I would assume they will pull these billions out of Argentina and send them out?

Why Milei Can't Lift Argentina's Currency Controls Any Time Soon

Javier Milei had big, ambitious goals before he took over as Argentina’s president. One of them: getting rid of the country’s currency controls. But, to the dismay …

financialpost.com

The estimates I hear is $5 billion in trapped dividends. Most likely there will be billions of dollars in capital outflow. This is why Argentina needs all the money from the IMF. If you look at the number they are trying to get, it covers the potential outflows plus a few billion. Companies have been trying to repatriate dividends to their shareholders outside of Argentina. It's been trapped here due to the Cepo.

The peso should sink lower once this happens unless the government tries to manipulate the peso which the IMF doesn't want. Caputo keeps saying they won't devalue the currency but probably have to keep up with that lie.

 

[VINO]

Agree these people are doing the same thing they did before. Will take a generation or more to pay this off. The government just keeps lying and now they are going to illegally act without going through the appropriate channel. All lies to make excuses to take on more debt.

Milei said on the campaign the IMF loans were wrong. Now he is doing he same thing. This from Cristina is a must read. She is right. His Austrian school experiment failed and now he is going against the things he said were wrong. The funny thing is he try to lie to Argentina with straight face and say all of these billions won't add on more debt! 🤡

For the English translation of CFK it was here too.

CFK lambasts Milei for deal with IMF

Former Argentine President Cristina Fernández de Kirchner (CFK) was heavily critical of the incumbent Javier Milei's intentions to borrow from the International Monetary Fund (IMF) to keep inflation at bay. She argued that Milei's reliance on the Austrian School of economics has led the...

en.mercopress.com

 

[MikeRoss]

I keep reading how the IMF is very close but the funds never come through. I read how they have not placed conditions on the money but I would have to believe they don't want Argentina using it to intervene in the peso. Argentina seems like it is blowing money trying to prop up the peso.

 

[import export]

The estimates I hear is $5 billion in trapped dividends. Most likely there will be billions of dollars in capital outflow. This is why Argentina needs all the money from the IMF. If you look at the number they are trying to get, it covers the potential outflows plus a few billion. Companies have been trying to repatriate dividends to their shareholders outside of Argentina. It's been trapped here due to the Cepo.

The peso should sink lower once this happens unless the government tries to manipulate the peso which the IMF doesn't want. Caputo keeps saying they won't devalue the currency but probably have to keep up with that lie.

Correct. Once the currency controls are lifted you will have billions and billions of dollars trapped in Argentina sent out of Argentina. But they need to do this because no foreign investments will come in with currency controls.

But make no mistake, billions will flee Argentina. This is a good read.

Javier Milei deepens Argentina's IMF debt trap with ‘emergency’ loan - Geopolitical Economy Report

Argentina's US-backed libertarian President Javier Milei takes emergency loan from IMF, deepening odious debt trap that caused high inflation

geopoliticaleconomy.com