IMF Pressure: Milei Advances with BCRA Reform to Limit Money Printing

The ghost of the International Monetary Fund once again loomed over the Casa Rosada. This time, with a concrete demand: reform the Central Bank Charter to limit its role to controlling inflation, sidelining economic development and employment. President Javier Milei, who until weeks ago said it was not a priority, now announced the submission of a bill.

The move was cooked up in a meeting with lawmakers from La Libertad Avanza, where Milei confirmed he is working closely with Economy Minister Luis Caputo, BCRA President Santiago Bausili, and Deregulation Minister Federico Sturzenegger. The goal is to modify Article 3 of the Charter, the rule that since 2012 has required the Central Bank to promote not only monetary stability but also employment and economic development with social equity.

“That article is what allowed the Kirchner administration to use the BCRA as an ATM to finance the deficit,” officials from the ruling party fired off. But the numbers speak for themselves: the highest inflation in the last 30 years occurred under Milei’s government, with money printing that keeps growing. Or wasn’t it the President himself who asked to print money to pay off debt maturities?

The reform pushed by the Executive is a carbon copy of what the IMF demanded in the second review of the agreement. In that document, the organization required “strengthening the Central Bank’s autonomy, improving its governance, and reinforcing safeguards against monetary financing of the fiscal deficit.” Time and again, the Fund has insisted that central banks should have a single objective: price stability. That’s what they did in Greece, in Portugal, and now they want to replicate it in Argentina.

Criticism poured in immediately. Mercedes Marcó del Pont, the BCRA president who pushed for the 2012 reform, was scathing: “It was to be expected; the IMF has been asking for it for a long time.” She added: “The drop in inflation is the result of recession, wage contraction, the exchange rate anchor, and import liberalization. It’s not monetary magic.” For the former official, “Milei’s myopia is thinking that the inflation problem can be solved with interest rates or the money supply.”

Miguel Pesce, who chaired the BCRA during Alberto Fernández’s government, also pushed back. “If you combine autonomy with a single objective, you can fall into a serious trap: the BCRA only focuses on controlling inflation, and in pursuit of that goal, it ends up causing a deep recession,” he warned. He cited the example of what happened in Europe during the 2008 crisis, where independent central banks applied austerity policies that sank entire countries.

The debate is not trivial. The Charter defines the Central Bank’s rules of the game: what it can do, how it is financed, and its relationship with the Government. The 2012 reform expanded the objectives and allowed the BCRA to assist the Treasury with temporary advances. Now, the ruling party wants to return to the previous model, where the sole mission was to preserve the value of the currency. But the most critical economists point out that such absolute independence does not exist in any serious country: the Central Bank is always part of economic policy.

Meanwhile, the IMF has already released a new disbursement of $1 billion to bolster reserves. Coincidence? Not at all. The BCRA reform is the price the Government pays to keep receiving fresh dollars. And Milei, who promised not to negotiate with the Fund, now lends himself to be its scribe.

The story doesn’t end here. The bill must pass through Congress, where the ruling party lacks a majority. The opposition has already stated it will not approve a law that hands over monetary sovereignty to the IMF. Will Milei dare to advance by decree? Anything is possible in this Argentina where promises are carried away by the wind.

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