EM LATAM CREDIT: Republic of Argentina (ARGENT; Caa3pos/CCC/CCC): IMF
" Luis Caputo revealed that the IMF loan will be USD 20 billion.” - Infobae
Positive
• Finance Minister Luis Caputo announced that he and the IMF agreed to release some details of the new agreement in advance to quell speculation that has triggered volatility in the markets. USD20bn is what will be submitted to the IMF Executive Board for approval.
• We expect a new IMF program to be announced sometime in the next few weeks to replace the Extended Fund Facility (EFF) signed in 2022 that expired in 2024. Argentina is also negotiating with the World Bank, IDB and CAF for further programs.
• ARGENT 2035 bonds were last quoted USD64.25, down in price from USD67 at 2024-year end and after hitting a five year high of USD69.25 in early January 2025.
• Caputo said he expects reserves after the new program to equal USD50bn from USD26.25bn as of yesterday. He went on to say that this agreement will not be like previous agreements, which we interpret as people should not expect immediate FX policy regime changes and fears of devaluation are overblown.
• The IMF expects GDP growth of 5%, an inflation rate of 45% and gross debt/GDP of 78.5% for 2025.
• In a January 2025 report evaluating the effectiveness of the previous 2022 facility, the IMF criticized the past administration’s gradual approach to reform and weak policy implementation while complimenting the Milei government for bold initiatives like fiscal reform and an upfront devaluation that helped macroeconomic stability.
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