Milei seeks to renew foreign policy and renegotiate with IMF on trip to the USA

The president-elect of Argentina, Javier Milei, met this Tuesday (28) with United States officials in Washington, as he seeks to formulate a plan to reshape the country’s foreign policy and lead its economy out of the crisis.

Following this plan, Milei’s economic team also met with members of the International Monetary Fund (IMF).

The Argentine leader told reporters as he left the White House that his meeting was “excellent.” Among those in attendance were U.S. National Security Advisor Jake Sullivan and Juan Gonzalez, the U.S. National Security Council’s senior director for the Western Hemisphere.

“We talked about the economic and social conditions in Argentina at the moment,” said Milei before being taken away in his official car. He aligned himself with Western values, his office later noted.

Javier Milei, a far-right libertarian, takes office on December 10. He won elections this month, promising radical reforms such as dollarization and “shock” austerity to fix Argentina’s economy.

Inflation in the South American country is close to 150%, foreign currency reserves are in the red and a recession is looming.

Milei’s foreign policy, however, is unabashedly pro-US and pro-Israel, with a cooler stance towards his main trading partners, Brazil and China.

“Milei is a unicorn, the leader of a large Latin American economy that is blatantly pro-American,” said Benjamin Gedan, director of the Latin America program at the Washington-based Wilson Center think tank.

Although the president-elect’s new team has sought to moderate previous criticism of China and the Brazilian government, the trip to the United States before his inauguration highlights his priorities.

He also promised not to join the China-led BRICS trade group. This is a drastic change in the approach that Alberto Fernandez, Argentina’s current center-left president, has adopted.

He visited Moscow as Vladimir Putin prepared the invasion of Ukraine in February last year and recently returned from a visit to Beijing.

The $44 Billion Question

Milei also needs to get Argentina’s $44 billion deal with the International Monetary Fund back on track, with the support of the US – the institution’s largest shareholder – key to any overhaul.

IMF managing director Kristalina Georgieva said this Tuesday that she would meet with Milei at the creditor’s headquarters, but the meeting did not take place. The IMF did not respond to a request for comment on the matter.

Even so, Milei’s economic advisors, Nicolás Posse and Luis Caputo, met with Gita Gopinath, “number 2” at the IMF, and other fund officials, the institution said in another note.

“[Eles] discussed the country’s complex challenges and plans to urgently reinforce stability and lay the foundations for more sustainable growth,” he said.

Argentina is by far the world’s largest debtor to the IMF, but its program has gone off the rails, and the institution has lost patience. The program is primarily used to reimburse the fund for a failed $57 billion 2018 infusion.

During the campaign, Javier Milei promised to dollarize South America’s second-largest economy, although he appears to have put that on the back burner as he tries to reverse a deep fiscal deficit and curb inflation.

However, he kept promises that he will radically change the mandate of the Argentine Central Bank.

The IMF has stated in the past that dollarization is not a substitute for sound macroeconomic policy. The lack of an orthodox political framework under the current administration and a sharp increase in Central Bank-financed expenditure in the run-up to the presidential elections have further damaged the Argentine economy.

Milei and IMF officials had a first virtual meeting on Friday, which Georgieva called a “very constructive engagement.”

Milei’s office pointed out that the meeting with the IMF was part of the protocol to explain the new team’s economic plan, and was not a search for more financing.

Kristalina Georgieva, however, highlighted to Reuters in an interview that the International Monetary Fund is “very interested” in supporting Argentina and that the country could be a candidate to receive a relatively small amount of extra financing through a trust fund for countries of average income.

Trump’s inauguration and presence

Javier Milei’s inauguration is scheduled for December 10th. Even though he has received support from Donald Trump, he will probably not be attended by the former US president, a person familiar with the matter told Reuters on Monday.

The Argentine libertarian’s press office had announced on November 23 that Trump would travel to Buenos Aires, but did not specifically say whether he would attend the inauguration.

A source close to the campaign of Donald Trump, who is currently seeking his party’s nomination to win back his old position in next year’s US elections, cited a tight campaign schedule as the likely impediment.

“There is nothing planned at the moment. With the Iowa caucuses, New Hampshire caucuses and the rest of the primaries approaching so quickly, this is something that would be difficult in the short term,” the source explained.

She also highlighted that the first presidential primary votes are scheduled for early next year.