The International Monetary Fund (IMF) has issued a statement following reports that Argentina's new Economy Minister, Luis Caputo, has taken measures to bolster the country's economy. Reports suggest that Caputo has reduced the value of the peso among other actions.
Caputo, in a recorded announcement, shed light on the strategies the new Argentine government intends to implement to strengthen the nation's economy. The newly appointed economic minister announced public spending cuts and a devaluation of the peso as part of his plan. He also stated there would be an increase in social spending for the country's poorest citizens, according to a Reuters report dated December 12.
"IMF staff welcome the measures announced earlier today by Argentina’s new Economy Minister, Luis Caputo. These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime. Their decisive implementation will help stabilize the economy and set the basis for more sustainable and private-sector led growth. Following serious policy setbacks over the past few months, this new package provides a good foundation for further discussions to bring the existing Fund-supported program back on track," said Julie Kozack, director of communications at IMF, in a statement issued on Dec. 12.
Argentina is grappling with nearly 150% inflation and owes $45 billion to IMF, as reported by PBS. The news outlet also noted that $10.6 billion of this debt is due to multilateral and private creditors by April 2024. The Argentine peso has been devalued to 800 per US Dollar and ministries have been reduced to nine in number. Caputo attributed these inflation issues to deficit problems within Argentina.
Argentina's economic woes are not recent phenomena; they have been subject to IMF scrutiny before. In 2018, Argentina entered into a 36-month Stand-By Arrangement approved in June of that year according to an official news release from 2018. In October, the IMF announced it had completed the first review and approved a $5.7 billion disbursement, bringing the total to $20.4 billion in disbursements from June to October of that year. The country was then working on a robust economic plan to stabilize its economy through budget deficit reduction and a simplified monetary blueprint.