Argentina has secured $42 billion of medium-term funding from the International Monetary Fund (IMF) and two other institutions alongside the unveiling of sweeping changes to its tight currency controls.
Its executive board on Friday agreed to a $20 billion bailout package, to be disbursed over four years. It will release $12 billion immediately, with an additional $2 billion subject to a review scheduled for June.
In addition, the World Bank has revealed a $12 billion Argentina support package, and the Inter-American Development Bank (IDB) will provide up to $10 billion in financing to the public and private sectors, all presented as three-year plans.
In a television broadcast, President Javier Milei announced most of Argentina’s strict capital and currency controls would be lifted as of Monday, among the conditions closing the big funding deals. “Today we are breaking the cycle of disillusionment and disenchantment and are starting to move forward for the first time,” he said, flanked by his ministers. “We have removed the exchange rate controls on the Argentine economy forever.”
The capital controls, known locally as “el cepo” or “the clamp,” were initially imposed by a previous government in 2019 to avoid additional financial decline and capital flight that the country has been suffering for years. The controls limited individuals’ access to purchase US dollars, creating a thriving black market that is widely utilized by residents. They also limited companies’ access to dollars, discouraging foreign investment that Milei is trying to attract.
The Argentine central bank will now allow the peso to float in a flexible currency band, rather than maintaining the fixed peg to the dollar. The band will be 1,000 to 1,400 pesos per dollar and will increase by 1 percent each month.
Announcing the support package, the IMF said the program is expected to release further official financing on multilateral terms and should facilitate Argentina’s early return to international capital markets. The IMF noted that the program supports a path toward macroeconomic stability, enhancing external sustainability, and laying the groundwork for more robust, resilient growth. Its primary features are a sound fiscal anchor and a transition to a more effective monetary and foreign exchange regime.
The organization commended the Argentine authorities’ commitment to achieving a zero-deficit budget, which has resulted in the first fiscal surplus in nearly two decades. However, to reach this surplus, Milei has dismissed tens of thousands of state workers, leading to significant impacts on the population, including increased poverty levels.
