BUENOS AIRES, Argentina (AP) — Argentine President Javier Milei’s economy minister announced on Friday that the libertarian government would lift the country’s strict capital and currency controls in a few days, a high-stakes gamble made possible by a new loan from the International Monetary Fund.
In a nationally televised address, Economy Minister Luis Caputo also said the IMF’s executive board had decided to approve the $20 billion bailout package announced earlier this week, which offers a lifeline to Argentina’s dangerously depleting foreign currency reserves.
“The agreement will allow us, starting Monday, to lift the exchange rate controls that so severely limit the normal functioning of the economy,” Caputo said from the government headquarters in Buenos Aires.
The capital controls, known here as “el cepo,” or “the trap,” are a tangle of regulations that help to stabilize the peso at an official rate and prevent capital flight from Argentina.
Imposed by a previous administration in 2019, the restrictions curb individuals’ and companies’ access to dollars, discouraging the foreign investment that Milei needs to achieve his goal of transforming heavily regulated Argentina into a free economy. The regulations have also created a vast black market for the U.S. currency.
The announcement came as the IMF’s executive board was preparing to approve the new $20 billion loan agreement with Argentina, the 23rd rescue package in the nation’s long and tumultuous economic history.
Milei had been seeking to shore up the central bank’s foreign reserves with fresh cash from the IMF before unwinding the restrictions. Lifting the controls without enough supply in the central bank could unleash years of pent-up demand for U.S. dollars and spark a currency run as companies try to send their long trapped fortunes home.
It’s a high-risk move, as capital flight would imperil Milei’s primary accomplishment over his past 15 months in office — lowering inflation — ahead of crucial midterm elections in October.
Already, inflation has inched up more than expected, surprising financial analysts and worrying Argentines who have become increasingly concerned Milei’s progress on lowering price increases might be stalling.
On Friday, Argentina’s National Statistics Institute, or INDEC, reported that monthly inflation had accelerated in March to its fastest pace in seven months, with consumer prices up 3.7% from the month before mainly as a result of rising food prices.
The last time inflation rose this much on a monthly basis was in August 2024, when prices jumped 4.2%. The INDEC report highlighted a 40% increase in the cost of vegetables in the capital of Buenos Aires.
