IMF's Georgieva praises Argentina reforms as $32.3 bln debt repayment looms in 2027

By: Leila Miller Source: Reuters

BUENOS AIRES, July 27 (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva expressed confidence on Monday in President Javier Milei's economic reforms and Argentina's ability to navigate a looming debt repayment crunch next year that could coincide with his reelection bid.

At a press conference in Buenos Aires, Georgieva praised Argentina's accumulation of foreign reserves, decline in inflation, fiscal discipline, and improved sovereign risk profile.

"I'm not worried about Argentina," she said, seated alongside Argentina's Economy Minister Luis Caputo.

Credit Rating Upgrades Boost Investor Optimism

Last week, Moody's upgraded the South American country's sovereign rating, following earlier upgrades by S&P Global and Fitch. The moves have added to investor optimism around Milei's efforts to stabilize an economy long associated with boom-and-bust cycles.

Investors have been closely monitoring what lies ahead. An IMF report had put Argentina's 2027 foreign-currency debt bill at $32.3 billion, including interest, before the central bank pushed $6 billion in repo financing into 2028 earlier this month.

Milei's government has said it plans to meet those obligations through a combination of:

• Multilateral financing
• Privatizations
• Local debt issuance

The government has stated it will avoid a return to international capital markets.

Political Timing and Election Risks

The timing is sensitive because the repayments will come due as Milei is widely expected to seek a second term. Any perception that the Argentine president could struggle to win reelection, or that a successor might change course on economic policy, could weigh on confidence and complicate financing.

Georgieva's trip—her first to Argentina as IMF chief—is set to include a meeting with Milei as well as a visit to Patagonia's Vaca Muerta shale formation, a cornerstone of the government's strategy to boost energy exports and generate the dollars needed to strengthen the country's finances.

She told reporters that while Argentina has made strong gains in capital-intensive sectors such as energy, the government should focus on:

• Other industries that continue to lag, such as construction
• Improving access to credit for small businesses and households

IMF Program and Economic Progress

Her two-day visit took place ahead of a third review of Argentina's $20 billion IMF loan program. Since Milei took office in late 2023, the global lender has consistently backed the government's fiscal discipline, legal reforms, and efforts to lower monthly inflation, which dropped from 25.5% in December 2023 to 1.9% in June.

The IMF's latest staff report nevertheless warned of "exceptional risks," stating that while Argentina's debt is sustainable, there was not a high probability it would remain so.

The Election Test Ahead

Next year looms as a crucial test not only for Milei's legislative agenda, but also for the IMF, which has heavily backed Argentina's economic turnaround.

Argentina remains the IMF's largest debtor, and the two sides have a complex history after a succession of programs failed to prevent repeated economic crises.

Investors' focus is shifting from Milei's success in stabilizing the economy to whether the recovery can endure, analysts say. The current challenge is to generate enough dollars, investment, and voter support to sustain his belt-tightening reforms beyond the initial turnaround.

Stronger exports and improving financial indicators alone will not guarantee electoral success if many Argentines are burdened by high household debt and precarious employment, analysts said.

"Milei's problem is no longer whether the macro story is believable abroad. It is whether voters can feel it at home," said Mariano Machado of risk consultancy Verisk Maplecroft.

The government's easing of import restrictions has led to steep job losses in inefficient manufacturing sectors, said Aldo Abram, executive director of the Fundacion Libertad y Progreso.

Moody's, while upgrading the country's rating, also noted ongoing risks to the economic outlook.

Reporting by Leila Miller; Editing by [Editor Name]