Luis Caputothe Minister of Economy of Argentina, has anticipated that the agreement with the International Monetary Fund (IMF) will be reached during the first four months of 2025. This news has generated expectations and speculation about the country’s economic future, especially in a context where Negotiations with the IMF are crucial for financial stability and economic growth.
Luis Caputo He has assured that the negotiations are “very well underway” and that the dialogue with the IMF is fluid and positive. However, he has also pointed out that the Fund’s times are slow, which implies that the negotiation process may take longer than expected.
Despite this, the minister is optimistic and confident that the agreement will be finalized in the first months of next year. The Minister of Economy has highlighted that to reach the agreement with the IMF and lift the exchange rate, three essential conditions must be met.
The first is for inflation to converge to the level of the “crawling peg”, a mechanism that allows a gradual adjustment of the exchange rate. Caputo has explained that if December inflation remains at the levels of October and November, the “crawling peg” could be reduced to 1% during January or February 2025.
The second condition is to balance the money market, adjusting the supply and demand of pesos. Caputo has pointed out that when the current government took office, the imbalance was total, with a very low demand for pesos and an excessive monetary supply.
However, thanks to the policies implemented, it has been possible to increase the demand for pesos and reduce the money supply, which has been crucial to stabilizing the economy. The third condition is to strengthen the reserves of the Central Bank.
Reality
Luis Caputo has indicated that an agreement with the IMF should be accompanied by an injection of dollars to recapitalize the Central Bank, which would allow the country to get out of the stocks and improve the exchange rate situation. The agreement with the IMF is seen as a fundamental step for Argentina’s economic recovery.
Caputo has emphasized that the understanding with the IMF will be important to lift the exchange rate, one of the government’s objectives in the short term. In addition, he highlighted that IMF officials are “marveled” with the performance of the economic plan in Argentina and that the country has received international recognition for the reforms implemented..
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