IMF clears Argentina's second review, then orders Milei to keep buying dollars
The Fund unlocks ~$1bn and praises the disinflation, but pins a reserves floor that critics say could reignite inflation in an election year
Summary
The Imf Executive Board on 21 May 2026 completed the second review of Argentina's 48-month, ~$20bn Extended Fund Facility and concluded the 2026 Article IV consultation, unlocking about $1bn (SDR 0.8bn). It granted a waiver for a missed performance criterion and modified the net-international-reserves target, in effect ordering Javier Milei's government to keep buying dollars through the Bcra FX-purchase program and hold exchange-rate flexibility. The Fund praised "impressive" fiscal, trade and labour reform and disinflation (headline near 33%, down from 211%), while pressing for an overall cash fiscal balance in 2026 via lower energy subsidies and tighter social-transfer targeting. The BCRA hit its ~$10bn reserve-buy goal in five months; markets watch ~$20bn of 2026 maturities.
The split
[[La Nación]] frames the release as vindication, the Fund says reserves are accumulating "faster than expected." Página/12 reads the identical document as a rebuke, stressing the reserve shortfall and arguing the Fund forced an accumulation U-turn that risks reigniting inflation. PIIE, from Washington, warns the managed peso and the January monetary scheme remain fragile regardless of the milestone. The gap is whether dollar-buying is a credibility win or an inflationary tax, the political question before the midterms.
By the numbers
- ~$1bn (SDR 0.8bn), disbursement unlocked by the second review.
- ~$20bn (SDR 15.267bn), total size of the EFF approved 11 April 2025.
- ~33%, headline annual inflation, down from a 211% peak.
- ~3%, sticky monthly inflation rate.
- ~$10bn, BCRA reserve-purchase target hit in five months.
- ~$20bn, Argentine debt maturities due across 2026.
Why it matters
Argentina's stabilisation is the IMF's showcase program, but the modified reserves floor exposes the core tension: rebuilding buffers means buying dollars, which can leak into inflation just as Milei heads into midterm elections with thin job creation. Success or a stumble reverberates across Sovereign Debt and emerging-market risk pricing.
What to watch
- Whether net-reserve targets are met at the next (June) test point without distorting the FX band.
- Monthly CPI prints: any reacceleration tied to dollar purchases.
- Passage and execution of the 2026 cash-balance fiscal path (energy subsidies, transfers).
- Midterm polling and any pressure to loosen the managed peso.