By Ryan Dubé

The International Monetary Fund agreed to provide Argentina with a new multibillion-dollar loan for which President Javier Milei had lobbied Trump administration officials in an effort to boost his nation's free-market overhaul.

The IMF said in a statement Tuesday that it reached a staff-level agreement with Argentina for a $20 billion loan disbursed over 48 months. The IMF's executive board still needs to approve the deal.

The U.S. is the biggest shareholder of the IMF, providing the Trump administration with significant influence over the approval of new financing programs. Milei has praised Trump and drawn close to Elon Musk while aligning Argentina's foreign policy with the U.S. He was one of the few foreign leaders to attend Trump's inauguration in January.

If approved, the new financing package would be Argentina's 23rd program with the IMF since the 1950s. Argentina is the IMF's largest debtor by far. The $20 billion would be on top of a current bailout worth more than $40 billion that Argentina received from the IMF stemming from a 2018 financial crisis.

The IMF said the funds will support the next phase of Argentina's reforms aimed at ensuring macroeconomic stability and sustainable growth, "while also managing the more challenging global backdrop." The Trump administration hit Argentine imports with a 10% tariff rate, which Argentine officials framed as a positive outcome because it was the lowest rate the U.S. imposed on other countries.

Milei, a self-described anarcho-capitalist who favors unfettered trade, has become a close ally of Musk since the Argentine leader took office in December 2023 with plans to slash regulations and implement an austerity program. Last week, Milei visited Mar-a-Lago, where he received the Lion of Liberty award during a gala of conservative activists. Milei didn't meet with Trump during that trip.

His administration has won praise from officials in the U.S. and at the IMF after he posted a rare balanced budget last year by slashing public spending with the mass firing of public workers, closing ministries and halting most infrastructure works.

After reaching a high of nearly 300%, Argentina's annual inflation rate eased to finish last year at 118%. Poverty has begun to ease, falling to 38% in the second half of 2024 from more than 50%.

But Milei's government still faces significant economic challenges, including lifting capital and currency controls that stifle investments needed to boost economic growth. And the government has struggled to build back up the central bank's depleted reserves in order to lift those controls.

Economists say the new IMF funds will allow Argentina to end those controls without causing a sharp devaluation of the peso currency, which would cause inflation to rise and likely undercut Milei's public support ahead of important congressional midterm elections in October.

Milei remains popular, polls show, but he has faced opposition from the country's once-powerful unions, with the powerful General Confederation of Labor planning a strike on Thursday. Recent protests that have included retirees and soccer fans have resulted in violent clashes with police.

Over decades of financial turmoil, Argentina has often turned to the IMF for a bailout, leading many Argentine left-wing politicians and activists to accuse the multilateral lender of intruding into the economy with painful austerity measures.

But on Tuesday, Milei posted on X a photo of himself celebrating the IMF deal by embracing Economy Minister Luis Caputo.

Write to Ryan Dubé at ryan.dube@wsj.com

(END) Dow Jones Newswires

April 08, 2025 22:28 ET (02:28 GMT)

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