Argentina secures $20bn IMF deal by relaxing currency controls
Argentina’s President Javier Milei announced Friday he’ll scrap most capital controls next week, a risky shift enabled by a new $20 billion IMF loan. The move aims to stabilize the crisis-hit economy after decades of overspending. The IMF praised Milei’s harsh austerity and zero-deficit policies, calling the plan “unprecedented.”
Dubbed “el cepo,” the controls—imposed in 2019—limited access to dollars, stifling investment and fueling a black market where pesos trade far below the official rate (1,375 vs. 1,097 per dollar). Lifting these rules Monday lets the peso float within a “currency band” of 1,000–1,400 per dollar, widening 1% monthly. This replaces a prior 1% monthly devaluation, which drained $2.5 billion in reserves recently.
Economists warn the peso could drop 20-25%, risking inflation spikes. Yet Milei insists it’s “not a devaluation,” betting the IMF’s $12 billion upfront cash injection will cushion reserves. Despite brutal spending cuts, his approval holds as inflation slows—a key campaign promise. Critics fear social unrest if prices surge, but Milei vows, “We’re breaking the cycle of disillusionment.”
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