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Original article: FMI presiona a Milei para comprar reservas y advierte riesgo cambiario, mientras el Gobierno se niega por temor a más inflación
The International Monetary Fund (IMF) has formally pressured Javier Milei’s government to urgently initiate the purchase of international reserves by Argentina’s Central Bank (BCRA), warning that delays in accumulating dollars could expose the country to a new currency crisis.
This request faces strong opposition from the Ministry of Economy led by Luis Caputo, as expressed by the agency’s spokesperson, Julie Kozack, during her weekly press conference in Washington.
The IMF’s stance aligns with the analyses and warnings issued in recent weeks by major international investment banks like JP Morgan and Barclays, which have raised alarms about the critical level of net reserves and the vulnerability of the economic strategy to potential shocks.
However, the so-called «libertarian» government remains adamant about not purchasing dollars on the mass market, arguing that such actions would exert upward pressure on the exchange rate, directly affecting domestic prices and threatening the already fragile disinflation process.
IMF’s Warning
Julie Kozack was direct in her evaluation of Argentina’s currency policy, emphasizing the urgent need to strengthen reserves.
«Monetary and exchange rate policies will need to have more ambitious contributions to accumulate reserves, which will help Argentina face potential shocks and facilitate access to markets,» the spokesperson stated.
Kozack insisted that Argentine authorities must «capitalize on the window of opportunity to implement a coherent monetary and exchange framework.»
According to Página/12, the Fund’s concern, similar to that of major banks, is that the libertarian government needed two bailouts—one from the IMF and another from the U.S. Treasury—due to the lack of reserve accumulation, prompting the spokesperson to refer to the agreed targets between both parties.
«Meeting the reserve targets by the end of the year will be challenging, but it is essential to accumulate reserves within the contemplated period,» she added.
The Fund also announced that a technical mission would arrive in the country in the coming days for a preliminary assessment ahead of the next review of the extended facilities program, scheduled for January.
“At the IMF, we have a framework to evaluate how to treat instruments of this nature, and that framework is applicable to Argentina’s swap line. This is something we will present in the technical staff’s report. The details of this exchange line will be in line with our technical framework,” she said, according to the cited media outlet.
Milei’s Resistance and the Ghost of Inflation
The IMF’s position comes at a time of tension between the agency’s technical recommendations and the political strategy of the economic team.
Just hours before Kozack’s announcement, Minister Luis Caputo downplayed the possibility of accumulating reserves in the short term during a meeting with business leaders.
Sources present at the meeting revealed that Caputo asserted that the libertarian administration plans to repurchase sovereign bonds and begin accumulating international reserves, even as the peso operates within the established exchange rate band. «He also hinted that the pace of adjustment of that band could be accelerated from the current 1% to 1.5% per month, depending on the evolution of inflation and the demand for pesos,» Bloomberg noted.
The central worry for the far-right government’s administration is that significant dollar purchases by the BCRA would fuel devaluation expectations in the market, widening the exchange gap and triggering a new inflation spike that could jeopardize the achievements made so far.
This stance has been reinforced by recent experiences: according to official analysts, the need for two financial bailouts (one from the IMF and another from the United States) in recent months was partly due to the lack of a sufficient reserve cushion, which now compels them to be extremely cautious about any measures that could destabilize the exchange rate.
International Banking Alarms
The IMF’s pressure is not an isolated occurrence, as global financial players have issued critical reports on the South American nation in recent days.
The American bank JP Morgan has taken steps to urge Caputo to purchase dollars. In a recent analysis, the bank projected that Argentina could accumulate reserves below 1% of GDP by 2026 and stressed that «increasing reserves must be a priority to strengthen the country’s defenses ahead of the general elections in 2027.»
JP Morgan argued that «the U.S. backing (from the Trump administration) should be used strategically and urgently to build internal cushions.»
The bank warned that «the capital flight from the peso to the dollar, driven by political risk, cannot be sustained without replenishing international reserves first.»
Meanwhile, Barclays had made a significant impact days earlier by pointing out, with concrete data, that the BCRA operates with deeply negative net reserves.
According to its technical report, net reserves—which stood at -US$11 billion at the start of Milei’s term—subsequently dropped to -US$16 billion, representing a deviation of approximately US$13 billion from the target set with the IMF for December.
Barclays concluded that this deterioration «did not arise from an improvement in the debt profile,» but from other commitments.
High-Risk Impasse
The clash between the IMF and international banks on one side and the Argentine government on the other highlights a core tension in the current economic policy. While creditors and external analysts prioritize external solvency and building defenses against a run, Milei’s administration focuses entirely on anchoring inflationary expectations, even at the cost of postponing the strengthening of reserves.
The arrival of the IMF’s technical mission in the coming days promises to be a stage for complex negotiations, where the definition of the «coherent monetary and exchange framework» demanded by the organization could determine not only the course of the agreement but also Argentina’s macroeconomic stability in the first quarter of 2025.
La entrada IMF Pressures Milei to Purchase Reserves Amid Currency Risk Concerns, While Government Hesitates Over Inflation Fears se publicó primero en El Ciudadano.
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