By Brendan O’Boyle
April 15 (Reuters) – Argentina reached a staff-level agreement with the International Monetary Fund on the second review of its $20 billion program, the IMF said on Wednesday, unlocking a $1 billion disbursement, subject to approval by its Executive Board.
“Reform momentum has significantly strengthened in recent months,” the IMF said in a statement, citing greater political support in South America’s second-largest economy for key reforms, as well as improvements to monetary and FX policy that have helped kickstart the accumulation of critical foreign reserves.
Argentina sealed the $20 billion, 48-month deal a year ago – its 23rd deal with the Washington-based lender – in order to help roll over an earlier $44 billion deal and give the government of libertarian Javier Milei financial firepower to undo capital controls and regain access to international capital markets.
Markets have since closely tracked the government’s ability to restore its depleted foreign reserves, a key requirement under the deal. When approving its first review last July, the IMF lowered the bar for the reserve accumulation targets through 2026 after Argentina missed its initial goal.
In recent months, however, the IMF has praised the central bank’s daily foreign currency purchases aimed at meeting debt obligations and rebuilding reserve buffers. So far in 2026, Argentina’s central bank has purchased more than $5.5 billion, although overall reserves remain constrained by ongoing debt payments.
Following a decisive victory for Milei’s agenda in October’s legislative elections, the IMF on Wednesday welcomed political support for Milei’s 2026 budget, as well as legislation aimed at “formalizing holdings of financial assets by residents, enhancing labor market flexibility, ratifying critical trade agreements, and unlocking investments in mining.”
Argentine dollar-denominated international bonds were trading mixed on Wednesday, with the 2038 issue up more than two cents to 79.25 cents on the dollar, still yielding over 10%, according to LSEG data. The 2041 fell 0.4 cent to 70.75.
Milei, an economist who has allied himself closely with U.S. President Donald Trump, has tempered Argentina’s long-running sky-high inflation with tough austerity and guided the country out of a recession. While his shock austerity had initially plunged millions into hardship, the country’s poverty rate has since fallen sharply, reaching 28.2% in the second half of 2025, the lowest level since the first half of 2018, according to government data.
Argentine Economy Minister Luis Caputo, who traveled to Washington this week for the IMF and World Bank spring meetings, welcomed the deal in a post on social media, thanking IMF Managing Director Kristalina Georgieva.
“This agreement is a very important step in consolidating the macroeconomic stability we have been working on these two years, and it will contribute to strengthening the economic growth of our country,” Caputo said.
The news comes amid an increasingly challenging global environment, impacted by conflict in the Middle East. The IMF on Tuesday downgraded its forecast for Argentina’s economic growth by half a percentage point, now expecting GDP to grow 3.5% this year, while inflation is seen reaching 30.4%, nearly double its earlier estimate.
Argentina has so far weathered the spillovers from the Middle East war relatively well, the IMF said on Wednesday, citing stronger fundamentals and its status as a net energy exporter.
Still, the global fuel price shock has put pressure on Milei’s free-market experiment, which has sharply reduced fuel subsidies, leaving Argentines more exposed as demand for natural gas imports rises with winter’s onset in June.
(Reporting by Brendan O’Boyle in Mexico City, Kanjyik Ghosh in Barcelona, and Rodrigo Campos in New York; Writing by Brendan O’Boyle; Editing by Natalia Siniawski and Daniel Wallis)
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