The government breathes: the IMF postponed the review of targets and Javier Milei buys time

The International Monetary Fund ( IMF ) mission, which was scheduled to arrive in Buenos Aires in mid-June to review compliance with the goals of the new US$20 billion financial program, will finally arrive in the country in July. The postponement is not minor: it gives breathing space to the Javier Milei government, which is struggling to meet the reserves target it committed to with the multilateral organization.

The change of date represents a relief for Milei's economic team, which was struggling with its financial situation. According to data from the NA news agency, the original target was for Net International Reserves (NIR) to reach US$-500 million by June 30, up from a floor of US$-4.9 billion on March 31. With this extension, the government gains key weeks to move closer to that goal without further straining the foreign exchange market.

Since the implementation of the new managed float, the Central Bank has stopped intervening in the market to buy dollars, with the aim of keeping the exchange rate in check and avoiding inflationary pressures. However, this decision has hampered the accumulation of reserves. So far this past month, reserves have fallen by approximately US$1.5 billion, reaching around US$37.8 billion this week.

In this context, the Treasury resorted to an alternative to obtain foreign currency without direct intervention: it issued peso-denominated bonds to foreign investors who brought in dollars to subscribe for them. In return, the government agreed to pay for these bonds in local currency. This maneuver, while not solving the underlying problem, allowed for the acquisition of fresh dollars and bought time with the IMF.

The postponement of the Fund's audit also helps ease the political tension that a potential default would generate. The government needs to show signs of compliance before international organizations, in a context where financial stability still hangs in the balance and prospects for economic recovery are fragile.

With more leeway and less pressure in the short term, the ruling party is now focused on moving forward with other reforms that condition future IMF disbursements. However, the underlying challenge remains: sustainably rebuilding reserves without altering the delicate inflationary balance and without resorting to mechanisms that compromise the credibility of the economic plan.