The International Monetary Fund urged the Argentine government to “make a concerted effort” to rebuild international reserves and admitted the country will struggle to meet its agreed target for 2025.
“At this stage, meeting the end-of-year reserve target will be challenging,” said IMF spokesperson Julie Kozack during a press briefing on Thursday.
Kozack said that the organization is advocating stronger reserves so the country can “strengthen the macroeconomic stability that has already been achieved”. It will also “help Argentina better address shocks”, she added.
Earlier this week, Economy Minister Luis Caputo downplayed the drop in reserves, saying the Milei government had bought “the highest amount of reserves in Argentine history” but had used most to pay foreign debt.
He announced his team was negotiating a loan with private banks for up to US$7 billion to cover the US$4.2 billion debt maturity due in January, without causing the country’s reserves to plummet.
Kozack said Argentina has made “substantial progress” towards reaching macroeconomic stability and that additional reforms and policies “would help sustain and expand the gains that have already been made” in terms of a drop in inflation and poverty, as well as a restart of economic growth.
According to the IMF, the government should carry out a “consistent and robust” monetary and foreign exchange policy framework to help support a “more ambitious” accumulation of reserves. This will “build adequate buffers in Argentina”, Kozack said.
On Monday, British bank Barclays made similar statements in a report, saying that reserve dynamics under President Javier Milei have been “weak,” and that the government didn’t take the October midterms victory as an opportunity to pivot its foreign exchange.
Reserves, they pointed out, are currently lower than before Milei became president. In December 2023, when he took office, net reserves stood at a then record low of –US$11 billion, while today they are at –US$16 billion. “This is [US$13 billion] short of the December target in the program with the IMF”, they stated.
Milei’s reforms President Javier Milei is aiming to pass a package of substantial reforms over the summer, during extraordinary sessions in Congress that are expected to begin after December 10. The new deputies, elected last October, will formally begin their terms on that date, and La Libertad Avanza has secured the first minority, ensuring an easier path for the government to pass bills.
The bills Milei will file for debate in Congress include the 2026 budget, as well as labor, fiscal, criminal and tax reforms.
Kozack said that the IMF is advocating for reforms to Argentina’s tax system, as well as on subsidies, and on implementing spending controls to “further strengthen the fiscal anchor.”
She also emphasized that the IMF believes the government should continue to carry out deregulation reforms and keep up its “efforts to improve the functioning and flexibility of markets, including the labor market.”
However, Kozack warned that the government will need to build consensus to pass these reforms. Since winning the October midterms, Milei appears to have decided to set aside his confrontational style and be more willing to negotiate and dialogue with the opposition.