“Why the IMF should rescue a recurring Mooring”. The Economist’s publishing house about Javier Milei’s Argentina published in the last hours poses that question and although a priori seems to be pessimistic, the British newspaper warns that the agency should, this time, “be generous with the loan.”
“At the end of the month, according to Kristalina Georgieva, managing director of the IMF, Argentina will have been rescued for the 23rd time. No other country has requested so frequently and so much; Nor has any client been so difficult, “details the British newspaper in the first paragraph of his analysis. While warning that the different previous governments” promised sensible reforms in exchange for help to avoid non -payment, Just to break the agreements once the money is delivered“.
However, in its editorial the weekly highlights the figure of Javier Milei by indicating that “It seems to represent an unusual break with the past.” “Since he assumed office in December 2023, has been cutting costs y recorting energy regulations“, he says. And therefore, it is that the British magazine states that “If the fund wants to move the country away from series rescue, it should be generous now.”
However, the analysis warns that, in recent years, the country’s dependence with the international credit agency acquired amazing proportions. “Argentina now owes 15% of its external debt to the IMF, which It makes the background its greatest individual creditor “indica.
And that dependence, limits, “It is a problem for both IMF and Argentina” given that “The fund faces financial risks, in addition to reputational.” “Loans to Argentina represent 28% of their credit portfolio, enough to threaten the solvency of the IMF if it is breached with payments “he detailed. And warned: “At least, The background would lose its stellar credit qualification, that allows you to borrow at a low price. ”
In turn, in that vicious circle that describes the opinion column of the British weekly, they point out: “It is difficult for others to Accept the IMF reform demands if they perceive that Argentina He has breached the same without real consequences. ”
The Economist dedicates some lines to warn that “the financial stability of Argentina is again on the tightrope.” “Since he assumed the position, Milei devalued the weight, But inflation did not decrease quicklywhich left the coin again overvalued. Excluding gold and swap lines from other countries, international reserves are still in red numbers. A few months of high import invoices, or a loss of confidence of foreign investors, could take the country to a balance of payments, ”he says.
However, the magazine suggests that this time the loan can work differently and that with that financial rescue “It will throw the money in the trash.”
For The Economist, since Javier Milei assumed he has carried out actions that make him “The best economic reformer that Argentina has had in decades”.
“The IMF is accustomed to dealing with politicians who make half promises. But Milei has raided the way by signing an executive order that avoids the need for Congress to approve a program, which could have delayed a rescue for months,” he said. And he completed: “In doing so, the president has also assumed personal responsibility to implement the IMF conditions, A promising signal “.
In another line, he pointed out that “Milei says that he wants to solve the problem with the weight permanently, eliminating capital controls and, eventually, allowing weight flotation. This would boost exports and relieve pressure on reserves, two elements necessary for the growth of Argentina. However, Milei is concerned that, if it goes ahead without a wide mattress of dollars, the risk of capital escape is run. It would trigger a monetary crisis and a rebound in inflation before the mid -term elections in November. ”
So, “to reassure Milei, the IMF should offer a generous amount of money, and fast“, Inferred the weekly, although,” however, this help should not be unconditional. ”
That is why, finally, the publisher suggests that the IMF offers “A generous amount of money soon.”