Javier Milei has approached the International Monetary Fund for a £9billion loan, as he prepares to make radical changes to Argentina’s capital and currency controls.
The Argentine President is desperate to attract more foreign investment to help revive the country’s economic fortunes.
However, the current strict controls that have been in place for nine of the last 13 years are deterring foreign investors.
Lifting the restrictions could cause a run on Argentina’s national currency, the peso, leaving the country’s cash-strapped Central Bank unable to respond.
As a result, the Argentine President is hoping to secure IMF funds to help the Central Bank weather any market volatility unleashed by his planned reforms.
Milei, however, insists he will push ahead with his plans irrespective of the IMF’s decision.
“Even without the IMF’s help, the controls will no longer exist on 1 January 2026,” he told a local television on Monday.
“Now, [if there is a disbursement], we can do it faster. We’ll have to see how the program is structured.”
The Argentine President has already scored a major economic success by taming the country’s runaway inflation, which hit a monthly peak of 26% in December 2023 – the same month in which he took office.
His radical libertarian reforms have cut the inflation rate to below 3%, ensuring his continuing popularity with the public.
However, removing the strict capital and currency controls poses serious risks of unleashing financial mayhem, which could reignite inflation.
“Milei doesn’t want to risk cutting the wrong wire in this [bomb] that he is disarming, and blowing up his whole success story,” Fabio Rodriguez told the Financial Times.
The director of the financial agency M & R Asociados added: “The problem is, we’ve had the controls for so long that we don’t know how many people will sell pesos when they are lifted, or where exactly the exchange rate should be.”
With the country set to go to the polls in October, many analysts believe that Milei will hold back on the reforms until after the elections.
The President is hoping that his party La Libertad Avanza will be able to boost their tiny minority in the country’s parliament.
Milei faces an uphill battle to secure IMF funding, with Argentina already in debt to the UN agency to the tune of £32billion.
