Argentina to Receive Next Loan Installment, IMF Praises Milei's Austerity Policy

(Patria) - The International Monetary Fund, Argentina's largest creditor, agreed on Monday to release the next tranche of loans due under the rescue program, supporting the government's austerity measures which are so severe they even exceed the conditions of the $43 billion loan, AP reported.

The agreement with the IMF followed the completion of its review of Argentina's compliance record and confirms that the next payment of $792 million will become available to the government in June, reassuring markets and boosting confidence among bankers regarding Argentina's prospects as it navigates its worst economic crisis in two decades.

The decision by the fund's technical staff still requires final approval from the IMF's executive board, which could take weeks.

Argentina's annual inflation rate reached 287% in March, among the highest in the world, deepening poverty and fueling strikes and protests. But the IMF praised President Javier Milei's libertarian government for a series of economic successes – Argentina's first quarterly fiscal surplus in 16 years, a decline in monthly inflation, and a rise in the prices of government bonds.

To overhaul the economy, Milei has cut public sector wages, eliminated thousands of government jobs, frozen public works projects, and reduced subsidies. He devalued the peso currency by more than 50%, helping it stabilize but causing a jump in the prices of basic goods. Although brutal for the poor and middle class, the market-oriented reform has "resulted in faster-than-expected progress in restoring macroeconomic stability and getting the program back on track," the IMF said, thanking Argentine authorities for the "resolute implementation of their stabilization plan."

The praise marks a dramatic turnaround in the past six decades during which Argentine politicians have shown little interest in implementing reforms envisioned as part of borrowing agreements. Previous left-leaning governments fell far short of IMF targets and relied on the central bank's money printing to finance treasury spending, pushing the country's IMF program – launched in 2018 and refinanced in 2022 – to the breaking point.

The international lender remains deeply unpopular in Argentina, where the public blames it for the economic implosion and debt default at the end of 2001. The IMF later acknowledged it made mistakes that contributed to the collapse.