The IMF alerts Argentina’s government under Javier Milei that net reserves remain critically low amid escalating dollar outflows. A private report reveals over $5 billion fled in 45 days, warning urgent measures are needed to stabilize the economy ahead of key negotiations.

Related:

Argentina Faces Waves of Protests Against Milei’s Brutal Austerity and Dismantling of the State

The International Monetary Fund (IMF) has once again sounded alarms over Argentina’s precarious foreign currency reserves, urging the Milei administration to urgently implement policies to solidify the trade balance and accumulate reserves.

The latest report on the external sector highlights that net reserves remain “critically low,” just weeks before the IMF Executive Board is set to evaluate the country’s compliance with the $20 billion loan agreement signed earlier this year.

Data from the Center for Research and Training of Argentina (CIFRA) reveal that in the past 45 days alone, over $5.2 billion fled the country through asset acquisition and capital flight. This staggering sum accounts for 44% of the first disbursement the IMF released under its January 2025 program.

Despite the Argentine government meeting fiscal and monetary emission targets, it has failed to reach reserve accumulation goals ,leaving net reserves at a whopping negative $6 billion by March’s end.

Economic analyst Ramiro Tosi, former subsecretary of financing, told Sputnik that the fundamental problem remains a steady outflow of dollars that far exceeds incoming export and investment revenue.

“The core issue is that more and more dollars are leaving, which does not align with what comes in through exports or investment,” he explained, noting the deeply structural nature of Argentina’s dollar scarcity.

While acknowledging Argentina’s economic advances since late 2023, the IMF cautions that reserve coverage remains “inadequate,” standing at a mere 23% of its benchmark indicator. The institution also notes the growing difficulty of accumulating foreign exchange since mid-2024, despite reinforced currency bands and tighter controls.

Oh, great news everyone! The IMF has officially declared Argentina's net reserves 'critically low.' Who knew? 🙄 They think lifting capital controls and pushing through structural reforms might help. Shocking stuff! Check out the full report here: https://t.co/lxtahHPBH6

— 🚨 Trading Alerts ® (@trading_alerts_) July 22, 2025

Adding pressure is a pronounced current account deficit, which ballooned to $5.19 billion in Q1 2025, compared to a $176 million surplus in the same period the previous year ,chiefly driven by soaring tourism expenses and import consumption.

Official statistics showed outbound travel spending increased by an unprecedented 388 percent year-over-year to $3.46 billion, while export surpluses failed to counterbalance the surge in imports.

Tosi highlights persistent vulnerabilities in Milei’s economic framework, describing it as afflicted by “structural weakness” that leaves Argentina exposed to external shocks and investor sentiment shifts. The reliance on credit lines and new loans to sustain reserves illustrates this fragility.

“A controlled exchange rate to approach upcoming elections is likely, but the real challenge lies in regaining reserve accumulation capacity without new external borrowing,” Tosi emphasized.

The anticipated boost from Vaca Muerta’s oil and gas exploitation looms on the horizon but remains years away from providing meaningful foreign currency inflows, Tosi warns.

Argentina now faces a politically charged second half of the year with provincial legislative elections in September, compounding pressures on currency demand amid volatile markets. The Milei administration is negotiating with the IMF for a waiver on reserve targets missed in the first semester.

The IMF recommends “restrictive macroprudential policies” to curb speculative capital flows, enhanced currency discipline, and structural reforms to ensure external sustainability.New multilateral loans totaling $1.5 billion from the Inter-American Development Bank and the World Bank provide temporary relief but underline the need for a durable strategy.

IN THIS ARTICLE