The IMF has reached an agreement with Argentina on a $20 billion bailout package.

The rescue package agreed between the IMF and Argentina serves as a lifeline for President Javier Milei, who is trying to dismantle the country's economic order. Argentina, which has received 22 IMF loans since 1958, owes more than $40 billion to the IMF.

On Tuesday, the International Monetary Fund (IMF) announced that it had reached a preliminary agreement with Argentina on a $20 billion rescue package. The rescue package, which is an agreement at the sub-management level, requires final approval from the IMF's board of directors. The IMF stated that the board would meet in the coming days. The long-awaited announcement from the fund has become a lifeline for President Milei, who has reduced inflation and stabilized Argentina's troubled economy with a free-market austerity agenda. Milei's policies have reversed the borrowing practices of the left-populist governments that could not pay their debts. The rescue package comes at a critical moment for South America's second-largest economy. Due to the government's tightening of money printing rules and the depletion of scarce dollars to support the shaky Argentine peso, pressure on Argentina's rapidly depleting foreign exchange reserves has increased. There were growing fears that if the government could not secure an IMF loan, the hard-won austerity measures would derail, and Argentina would once again be unable to pay its enormous debts or settle import bills. The cash flow gives Milei a serious chance to ease Argentina's strict currency controls, which could help convince markets of the sustainability of his program. Over the past six years, capital restrictions have deterred investments and ensured that the central bank carefully managed the peso, which is pegged to the dollar. Argentina has over $40 billion in debt to the IMF, having received 22 IMF loans since 1958. Most of the IMF funds have been used to repay the IMF itself, earning the organization a troubled reputation among Argentinians. Many hold the IMF responsible for the country's historic economic collapse and debt default in 2001. The IMF was hesitant to make a new deal with its largest debtor. However, over the past 16 months, fund officials have praised Milei's austerity policy. A former television host who describes himself as an "anarcho-capitalist," Milei came to power with promises to shrink Argentina's bloated bureaucracy, reduce rising inflation, open the economy to international markets, and attract foreign investors after years of isolation. Unlike Argentine politicians in previous years who avoided enraging the masses with harsh austerity measures, Milei has laid off tens of thousands of public employees, abolished or reduced a dozen ministries, cut inflation adjustments for pensions, froze public works projects, lifted price controls, and reduced subsidies. Critics point out that the costs of Argentina's rosy macroeconomic indicators are borne most by the poor. While retirees protest their low pensions every week, the reduction in payments represents the largest share among Milei's budget cuts. Major labor unions have announced a 36-hour general strike starting Wednesday in solidarity. Still, Milei has maintained solid approval ratings, which analysts attribute to his success in reducing inflation, which fell from 211% to 118% in his first year in office. The transformation of budget deficits into surpluses has led to a rise in the local stock market and a drop in the country risk rating, a key barometer of investor confidence. While announcing the agreement under a 48-month arrangement, the IMF stated, "The agreement is based on the impressive early progress made by the authorities in stabilizing the economy, supported by a strong fiscal anchor that provides rapid disinflation." "The program supports the next phase of Argentina's domestic stability and reform agenda." There remained uncertainty over how much of an upfront payment Argentina would receive, which was a key point of disagreement in the final negotiations regarding the details of the agreement. While IMF loans are typically repaid over several years, Argentina is seeking a hefty upfront payment to replenish its reserves. Milei shared the IMF's announcement on the social media platform X, along with a photo showing him hugging Economy Minister Luis Caputo. It appears that Milei mistakenly wrote "Vavos!" out of excitement, instead of "Vamos!" or "Let's go!"