IMF and World Bank approve $42 billion bailout for Argentina’s struggling economy

Milei hails historic IMF and World Bank deal as Argentina’s economy set to grow "like never before."

Argentina's President Javier Milei speaks during a joint press conference at the Palacio de Lopez government palace in Asuncion, Paraguay, on April 9, 2025. Photo by Daniel Duarte/AFP

By Anna Fadiah and Hayu Andini

In a moment of economic reckoning, the IMF and World Bank approved a $42 billion bailout for Argentina’s struggling economy on Friday, delivering a lifeline to President Javier Milei's ambitious fiscal overhaul. With the Inter-American Development Bank (IDB) also pledging substantial support, the combined aid is poised to become the largest financial package Argentina has seen in recent years. President Milei, championing what he calls a libertarian revolution, declared the aid would power Argentina into an era of “growth like never before.”

The $42 billion bailout comes as Argentina grapples with one of the world’s highest inflation rates, a decimated currency, dwindling foreign reserves, and a deeply skeptical public. Yet the international community’s backing, led by the International Monetary Fund, is being hailed by the Milei administration as a vote of confidence in his radical economic transformation.

A landmark deal to revive Argentina’s economy

The International Monetary Fund announced a new four-year $20 billion loan to Argentina, describing it as a strong endorsement of the government’s reformist agenda. That was followed by a $12 billion commitment from the World Bank and a $10 billion package from the IDB.

Finance Minister Luis Caputo revealed that Argentina expects to receive $19 billion from these sources within the next two months, including an immediate $12 billion installment from the IMF. That liquidity, according to Caputo, will be used to stabilize the peso, replenish the central bank’s reserves, and move the country away from long-standing exchange controls.

The timing could not be more critical. Argentina’s battered currency has experienced severe volatility, and capital flight has intensified.

"The new program is a vote of confidence in the government’s determination to advance reforms, foster growth, and deliver higher standards of living for the Argentine people," IMF Managing Director Kristalina Georgieva said in a statement posted on X. She praised President Milei’s "impressive progress in stabilizing the economy."

Milei’s ambitious reforms earn global backing

President Milei, who took office in December 2023, has upended traditional Argentine politics by aggressively slashing public spending, cutting the number of ministries in half, and vetoing inflation-linked pension hikes. His approach—unapologetically radical—has drawn criticism at home but appears to be yielding results on the international stage.

“Argentina will be the country with the strongest economic growth for the coming 30 years,” Milei declared during a televised address on Friday night. “The economy will grow like never before.”

The optimism stems not only from the bailout but also from the government’s control over inflation. Official data showed annual inflation in March dropped to 55.9 percent—down from a staggering 211 percent at the end of 2023. Monthly inflation rose slightly to 3.7 percent in March, compared to 2.4 percent in February, but the overall trajectory remains downward.

Dismantling currency controls and attracting foreign investment

As part of the bailout’s terms, Argentina will implement significant currency policy changes. Exchange controls, which had been in place since 2019, are now being lifted. The Central Bank announced that the peso would float within a range of 1,000 to 1,400 per U.S. dollar, offering more flexibility to market forces.

At the same time, the $200 monthly cap on individuals purchasing U.S. dollars is being removed. Exporters will no longer be subject to differential exchange rates, and foreign investors will be allowed to repatriate profits beginning in 2025. The Central Bank says these moves aim to restore confidence and encourage investment.

On Friday, the official exchange rate stood at 1,097 pesos per dollar, while the unofficial “blue” market rate hovered around 1,375 pesos—a sign of ongoing tensions between state policy and market expectations.

A necessary gamble for Milei’s survival

For many analysts, the IMF and World Bank approval of a $42 billion bailout for Argentina is not just economic—it’s political.

“Milei needs this deal like he needs air,” said Belen Amadeo, a political scientist at the University of Buenos Aires. “He needs it to back up his economic offer, give himself more room to maneuver, because if instability sets in and inflation rises, insecurity will reach the population and they will flee immediately to the dollar.”

Argentina’s economic history is riddled with crises, hyperinflation, and defaults. Since joining the IMF in 1956, the country has accepted assistance 23 times. Most recently, it negotiated a $44 billion loan from the IMF in 2018—the largest ever in the institution’s history—which remains a burden on its balance sheet.

But Milei is determined to change that legacy. His government aims to use the new funds to eliminate central bank financing of the Treasury, which he blames for chronic inflation. He believes that restoring fiscal discipline and respecting market forces will finally turn the page on Argentina’s endless economic woes.

Balancing progress and public pain

Despite achieving the country’s first budget surplus in over a decade last year, the cost of reform has been steep. Tens of thousands of public employees have been laid off, and many Argentines have seen their purchasing power evaporate. Consumer spending remains weak, and unemployment is a growing concern.

Milei’s approval ratings, while still relatively high among his base, have started to slip as the realities of austerity take hold. Yet the president insists the short-term pain will pave the way for long-term prosperity.

U.S. Treasury Secretary Scott Bessent is expected to visit Buenos Aires next week, a symbolic move that underlines Washington’s support for Milei’s economic policies. His office confirmed that he will "affirm the United States' full support for Argentina's bold economic reforms."

A fragile road ahead

While the IMF and World Bank have approved a $42 billion bailout for Argentina, doubts remain about the sustainability of the recovery. Analysts warn that even with fresh liquidity, the real challenge will be implementing structural reforms in a country where political resistance and social unrest can quickly derail economic plans.

Yet Milei appears confident. With the support of the IMF, World Bank, and IDB, and a new monetary framework designed to free up capital and encourage growth, the president is betting on an economic comeback that could redefine Argentina’s global standing.

As billions in financial aid start to flow in, Argentina stands at a crossroads. Success will depend on execution, stability, and whether the Argentine people can endure the short-term sacrifices required to achieve Milei’s vision of a thriving, modern economy.