Buenos Aires, April 12, 2025 – The International Monetary Fund (IMF) has greenlit a $20 billion bailout package for Argentina, with $12 billion set to be disbursed immediately, as part of a broader international effort to stabilize the country’s struggling economy. Alongside the IMF’s commitment, the World Bank unveiled a $12 billion support package, while the Inter-American Development Bank (IDB) pledged up to $10 billion in financing, bringing the total aid to a potential $42 billion.
The influx of funds comes at a critical time for Argentina, which has been grappling with a weakening peso and economic instability. Some of the funds are expected to be released as early as next week, providing a lifeline to help defend the nation’s currency and support President Javier Milei’s ambitious economic reforms.
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President Milei, a libertarian known for his aggressive policy approach, hailed the aid as a turning point, predicting that the Argentine economy would grow “like never before.” The financial support is seen as a significant political victory for Milei, whose administration has been working to restore confidence in the country’s economic future.
The combined efforts of the IMF, World Bank, and IDB signal strong international backing for Argentina’s recovery, though challenges remain as the nation navigates its path to sustainable growth.
Argentina’s Economic Conditions Now:
- GDP Growth: Argentina’s GDP contracted by 3.8% in 2024, driven by aggressive fiscal adjustments and a stabilization plan. However, a recovery is underway, with GDP growth projected at 5% for 2025, fueled by private consumption, investment, and improved agricultural output. In Q3 2024, economic activity rebounded by 3.9%, and quarterly growth reached 3.4%, led by agriculture (up 80.2% year-on-year) and other sectors like manufacturing and trade.
- Inflation: Inflation has decreased significantly but remains high. The monthly inflation rate dropped from a peak of 25.5% in December 2023 to 4.2% in August 2024, stabilizing around 3% to 4.2% since May 2024. However, annual inflation in 2024 was still elevated, with consumer prices rising by 112% through November 2024. The government projects inflation to fall to 18% in 2025.
- Fiscal Balance: For the first time in over a decade, Argentina achieved a fiscal surplus in 2024, totaling 0.3% of GDP, with a primary surplus (excluding debt payments) of 1.8% of GDP. This was driven by a 30% reduction in government spending, including cuts to subsidies, public wages, and infrastructure projects. The 2025 budget aims for a “zero deficit,” though revenue challenges persist after the removal of the PAIS tax, which reduced revenue by 0.4% of GDP in 2024.
- Poverty and Inequality: Poverty remains a pressing issue. The poverty rate surged to 53% in the first half of 2024, up from 40% in 2023, before dipping slightly to 50% by late 2024. Extreme poverty affects over 6 million people, with 70% of children living in poverty and 1 million children facing food insecurity, according to UNICEF. Income inequality has improved historically—by 2010, the richest 10% earned 29% of income (down from 40% in 2002), while the poorest 10% earned 1.8% (up from 1.1%)—but recent austerity measures have disproportionately impacted the working class.
- Unemployment: The unemployment rate averaged 8.2% over the decade to 2023, rising to double digits in 2020 due to the COVID-19 pandemic. While specific 2025 figures are unavailable, recovery from the pandemic and recent economic growth suggest a decline, though Milei’s austerity measures have increased job market pressures in the short term.
- Currency and Exchange Rate: The peso remains a concern, with some analysts noting it is overvalued. After a 54% devaluation in December 2023, the peso has since devalued by 26% against the US dollar through November 2024 due to a 2% monthly crawling peg. This has led to a 40% appreciation in Argentina’s real effective exchange rate, making exports less competitive while incentivizing imports.
- Country Risk: Argentina’s country risk has decreased, falling from 2,100 points in January 2024 to 1,280 points in October 2024, though it remains one of the highest in the region. This reflects cautious optimism about Milei’s reforms but highlights ongoing challenges in accessing international credit markets.
- Debt: Argentina’s external debt remains significant. The national debt-to-GDP ratio decreased to 84.68% in 2022, the lowest since 2017. However, 56% of total debt is in foreign currency, and large payments to the IMF are due starting in 2027, with $31,100 million in outstanding loans as of December 2024. The recent $20 billion IMF bailout, with $12 billion disbursed immediately, aims to ease these pressures.
- Trade and Reserves: Argentina recorded a record trade surplus of $18.9 billion in 2024, driven by agricultural exports. However, the overvalued peso and trade restrictions (e.g., a 17.5% PAIS tax on imports) have slowed reserve accumulation by the Central Bank, which is critical for managing foreign debt payments.
- Public Sentiment: Public perception of Milei’s governance is mixed. As of early 2025, 59% of the richest 20% approve of his policies, compared to 39% of the poorest 20%. Overall, 53% of Argentinians believe their standard of living is improving, matching 2015 highs, but 69% think it’s a bad time to look for a job, and 35% report not having enough money for food.
