In address to congress, Argentine President Milei promises IMF deal and lauds economic wins

BUENOS AIRES, Argentina (AP) - Argentina's libertarian president Javier Milei signaled late Saturday that a new deal with the International Monetary Fund was imminent, as he used his annual address to congress to project an optimistic picture of his economic overhaul following a divisive first year in office and recent swirl of controversies.

In a speech that played to the sentiments of his right-wing base but included little in the way of new policy, Milei promised the crisis-stricken nation that, in the coming days, he would "ask congress to support the government in this new agreement with the International Monetary Fund” even as it seemed Argentina had yet to close the deal.

Revisiting the economic themes of his 2023 presidential campaign ahead of crucial midterm elections in October, Milei declared: "We went from talking about hyperinflation to talking about long-term stability."

He cited his standard refrain about the government's success in dragging down the monthly inflation rate from a peak of 26% in December 2023, when he entered office, to just over 2% in January, and in helping the country claw its way out of a painful recession.

"We have gone from being a global laughing stock … to being an unexpected protagonist," Milei said.

Tech billionaire Elon Musk, who waved a chainsaw gifted by Milei at the Conservative Political Action Conference last week in Washington, has cited the Argentine president's approach as inspiration for his own rampage through American federal bureaucracy.

"The eyes of the world are now on Argentina after a long time," he said. "As is the case of Elon.”

On trade policy, Milei announced Argentina would leave the Mercosur bloc of South American nations if needed to clinch a free trade agreement with the United States.

It marked Milei’s latest effort to align his nation with U.S. President Donald Trump’s administration at the expense of Argentina's previous allies and regional partnerships.

"To take advantage of this historic opportunity, we must be willing to make things more flexible or even, if necessary, to leave Mercosur," he said.

In his speech, Milei gave no further details about the supposed new financing deal with the Washington-based lender - a program his government has sought for months in order to help lift Argentina’s strict capital and currency controls in hopes of reaping the benefits his free-market reforms, which, in 2024, delivered Argentina's first fiscal surplus in 14 years.

Milei said his government would use a cash infusion from the IMF to replenish the central bank's diminished hard currency reserves, helping prevent a possible run on the peso as Argentina attempts to lift its complex web of capital controls before the year’s end.

"This new agreement will give us the tools to pave the way toward a freer and more efficient exchange rate system for all our citizens, to attract greater investments that will translate into lower inflation, greater growth and employment levels," Milei told congress.

Foreign companies consider the notorious currency controls, which set an official exchange rate and restrict access to dollars in Argentina, to be the greatest impediment to investing in Argentina.

The IMF, encouraged by Milei's progress but wary about the sustainability of his austerity, has been weighing whether to lend more money to troubled Argentina, its largest debtor with a history of defaults that still owes over $40 billon for its most recent program that ended in December.

The fund did not immediately respond to a request for comment.

While Milei’s speech couched his successes as wins for the Argentine people, a boycott by members of Argentina's left-leaning opposition Peronist party, Unión por la Patria, left the typically packed legislative chamber half-empty.

The Peronist bloc controls 46% of seats in the senate and 39% in the lower house - compared with just 10% and 15% respectively for Milei's La Libertad Avanza party.

That Milei's political opponents remain hostile is no surprise, experts say, as the president pushes at the generally understood limits of executive power to steer around congress.

The irascible former rocker and TV personality has brought a softer tone to his negotiations with lawmakers in recent months, borrowing some votes from the former center-right government of Mauricio Macri to ensure the passage of some key initiatives.

But Milei has largely relied on decrees and other executive powers to deregulate industries, dissolve ministries, lay off over 40,000 public employees, eliminate public works projects, slash inflation adjustments for pensions and wages and curb the powers of trade unions, among other changes.

"He showed that he can govern the country without congress," said Sebastián Menescaldi, an economist with the Buenos Aires consultancy firm EcoGo.

Last week, Milei inflamed the political opposition by announcing he would bypass the country's senate to appoint two Supreme Court justice nominees by decree - one of whom has triggered backlash over accusations of money laundering and illicit enrichment.

The appointments were widely criticized an overreach of executive authority that would ensure favorable rulings on his sweeping reforms whose constitutionality has been questioned in federal courts.

As tensions rise between the government and lawmakers, midterm elections in October 2025 will prove crucial. A good result in the ballot would allow Milei "to make all the changes he wants and not have to make any concessions,” said Menescaldi, warning, "That could mean he becomes more authoritarian."

In recent weeks, the far-right economist has confronted the biggest crisis in his 14-month-old administration after promoting an unknown cryptocurrency token that shot up after his endorsement and rapidly cratered, prompting dozens of criminal complaints and calls for his impeachment.

Federal prosecutors have opened an investigation into possible fraud and abuse of authority.

Milei made no mention of the crypto scandal during his speech Saturday, which lasted over an hour.