Faced with an imminent agreement, the IMF confirms that Argentina will grow 5% this year, driven by the increase in salaries and credits

The International Monetary Fund ratified this Friday the growth projections for Argentina, 5% for this year, driven by the increase in real wages and credit. The organization’s announcement occurs before the imminent signing of a new agreement between the Government and the organization and hours before a meeting in Washington between President Javier Milei and Managing Director Kristalina Georgieva.

The Fund presented an update to its Global Economic Outlook report (known as WEO), which revised the global forecasts it had prepared in October, for the organization’s annual meeting.

In the Argentine case, the growth prospects practically did not change: they predict that The country’s GDP will grow 5% in 2025 and another 5% next year, a little more than the 4.7% that had been predicted months ago for 2026. The figures are similar to those projected on Thursday by the World Bank.

The Fund’s report was presented at a virtual press conference in Washington by the organization’s chief economist, Pierre-Olivier Gourinchas.

“We are seeing a significant change for the Argentine economy in 2025 compared to 2024, which was the year in which really very strong contractionary measures, especially fiscal, were implemented to contain inflation,” Gourinchas said.

“The government put in place very contractionary fiscal measures with a fiscal contraction of around 5% of GDP and that is one of the main drivers. What we are seeing now is that the economy is rebounding from real GDP,” he added.

“In the second half of 2024, the economy already began to rebound quite strongly, in fact, in the third quarter of the year, growth was already 4% quarter-on-quarter. “So this is a very strong rebound, and we anticipate that this rebound will continue into 2025 and that it will be driven by rising real wages.”

“It will also be driven by the increase in bank credit and this will help stabilize the Argentine economy.”

Gourinchas also spoke of a “tremendous progress” in the fight against inflation. He recalled that a little over a year ago prices rose 25% a month and that now the December numbers had fallen to 2.7%.

“This is an impressive achievement and, Of course, more needs to be done to further reduce inflation in the coming years, and that is where the talks with the Fund are taking place, and I am not going to comment on this because the discussions are ongoing,” he said.

The ratification of growth is a positive sign for the Government, in the midst of feverish negotiations between the Fund’s technicians and the economic team headed by Minister Luis Caputo for the signing of a new program that contemplates an additional disbursement that could be around 11,000 million of dollars that President Milei plans to allocate to cushion a future exit from the stocks.

The agreement seems imminent, although negotiations continue. Minister Caputo himself said that they were “on the right track” and the Government hopes that the arrival of Donald Trump to the White House next Monday will provide the necessary impetus from the United States in the executive board for it to be approved.

Milei will also seek to clear the way for the new program this Sunday, when she meets in Washington with Georgieva. The president will arrive this Saturday in the US capital for Trump’s inauguration and will take the opportunity to see the head of the Fund face to face and refine the details of the future agreement.

The Government has already received very positive signals from Georgieva. Days ago, she effusively highlighted the changes in Argentina’s economic policy and considered that it is “one of the most impressive cases in recent history”when praising the results obtained with the economic reforms that Milei promoted in his first year in office.

Georgieva opined that “in many countries” there was “a change of gear on the public policy front.” But, he noted, “the most impressive case in recent history is Argentina, where the effects have been profound, with the implementation of a solid stabilization and growth program.”

At the end of December, the Fund confirmed that Argentina is seeking a new agreement to succeed the US$44 billion agreement. The Minister of Economy also assured that he wants to close an agreement with the international credit organization in the first quarter of this year.

Despite official optimism, the Fund has not yet given any indication that it would provide additional money, although it is possible that he does it as a sign of support. Beyond being pleased with the reforms undertaken by Milei, the IMF seeks to ensure that any new program has consensus and that this is achieved with an endorsement from Congress, which could become complicated in an election year.

If finalized, it would be Argentina’s third agreement with the IMF since 2018, after the program with Mauricio Macri and the one in 2022 during the government of Alberto Fernández.