IMF, World Bank, and IDB Commit $42 Billion to Back President Milei’s Market-Oriented Overhaul

IMF’s $20 Billion Extended Fund Facility

On April 11, the IMF approved a 48-month Extended Fund Facility (EFF) arrangement for Argentina, amounting to $20 billion. An immediate disbursement of $12 billion was authorized, with an additional $2 billion expected following a review in June. This marks Argentina’s 23rd arrangement with the IMF, reinforcing its position as the Fund’s largest debtor.

The EFF supports Argentina’s transition to a more flexible monetary and foreign exchange regime, aiming to entrench macroeconomic stability and strengthen external sustainability. Key policy priorities include sustaining a strong fiscal anchor and advancing structural reforms to create a more open, market-oriented economy.

Complementary Support from the World Bank and IDB

In addition to the IMF’s assistance, the World Bank announced a $12 billion support package to aid Argentina’s economic reforms and enhance government initiatives to stimulate job creation. The IDB also committed $10 billion over three years, aiming to reinforce the nation’s strategies to revitalize growth and employment.

Economic Reforms and Policy Shifts

President Milei’s administration has undertaken significant policy shifts, including lifting most capital and currency controls—a move backed by the new IMF bailout deal. The government ended the ‘cepo,’ a restrictive regime on dollar access imposed in 2019, allowing the peso to trade within a controlled band of 1,000 to 1,400 pesos per dollar. This policy change aims to stabilize the economy and attract investment, though it carries risks such as potential capital flight and inflation spikes.

Social and Political Implications

While these reforms have garnered praise from international lenders, they have also led to social strain, including extensive public sector cuts. Despite these challenges, President Milei has maintained solid approval ratings, attributed to his success in reducing inflation and achieving a fiscal surplus—the first in nearly two decades.

Conclusion

Argentina’s receipt of $42 billion in international financial aid marks a pivotal moment in its economic trajectory. The combined support from the IMF, World Bank, and IDB underscores global confidence in President Milei’s reform agenda. However, the success of these initiatives will depend on careful implementation and the government’s ability to balance economic liberalization with social stability.