IMF chief praised Argentina's government...Still the largest debtor country

International Monetary Fund (IMF) President Kristalina Georgieva called the outcome of economic reforms implemented by the Argentine government "one of the most impressive examples in recent times."

Argentina's local daily Ambito reported that Georgieva praised the economic reforms of Argentina's Javier Milay regime last year, saying they enabled the implementation of programs for economic stability and growth.

While the IMF governor praised the Milay government's macro performance, the IMF recently released a report on Argentina's loan, pointing out that the aid program has in fact failed.

Argentina was the largest debtor in IMF history in 2018 with the largest loan support, having to repay 59 trillion won, accounting for 27.7% of the IMF's total loans, and has already renegotiated it once in 2022.

The IMF praised the Milay government, which took office in December 2023, for pushing for fiscal tightening and implementing economic stabilization programs without additional help from the IMF, but recommended several issues.

First of all, he stressed the need to end foreign exchange regulations and unify the existing dollar exchange rates to strengthen the central bank's foreign currency reserves by liberalizing the foreign exchange market.

This means devaluation of the Argentine peso, which the government of Milay has maintained that if implemented now, it could lead to inflation again, so it will only be implemented after securing enough dollars.

The IMF also advised the Argentine government that real interest rates should be higher than inflation rates, and that energy and public transport subsidies should be reduced, as well as tax reforms.

The IMF said that such reforms may depend on whether society can accept them, adding that as the poverty rate has increased, support for the protection of vulnerable people may need to be strengthened.

The Milay government hopes the IMF will provide 16 trillion won in new funding and has also requested renegotiation of the 65 trillion won loan repayment program, which was supported by the IMF in 2018, under the previous government.