Buenos Aires: The last time Luis Caputo negotiated with the International Monetary Fund (IMF), fierce disagreements over how to manage Argentina’s struggling currency caused him to quit his job as the country’s central bank chief.

       A little more than five years later, Caputo is back for a second act, and the IMF that forced his exit during those 2018 talks is cheering his initial efforts to salvage an economy that plunged further into crisis.

       Tapped by libertarian President Javier Milei to lead the economy ministry, Caputo last Wednesday reached a staff-level agreement with the Washington-based lender over how to save a US$44bil aid programme that the IMF said “went severely off track” with the previous government.

       The pact is key to unlocking a US$4.7bil IMF disbursement Argentina needs to repay debts owed to the fund itself, and will also provide breathing room until the next IMF review in May.

       By then, Caputo and Milei can decide whether to negotiate a completely new deal or seek more funding. In the near term, Caputo only saw one option.

       “What we’ve done was the most viable alternative,” Caputo told reporters at a press conference last Wednesday night.

       “If I would like to go to a new programme and eventually seek new funds, the IMF is open to that possibility. But we honestly believe that it’s time for the country to resolve its financial problems, or as I’ve said, its structural root problems.”

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       Press offices at the IMF and Economy Ministry didn’t respond to multiple requests for comment, nor written questions. In a statement last Wednesday, the IMF praised Caputo’s “strong policy package” but acknowledged “the path to stability will be a challenging one, with conditions worsening before they get better.”

       The deal marks a striking turnaround for Caputo and the IMF, one precipitated by Argentina’s continued decline and Milei’s prescription of “shock therapy” to reverse it. His ability to win an agreement with an institution that once drove him out of government, meanwhile, may help bolster market optimism that he may be able to navigate the litany of problems ailing South America’s second-largest economy.

       “It’ll be a more politically-savvy Caputo, he has more experience in government,” said Gustavo Flores-Macias, a Cornell University public policy professor. The government and IMF “are more aligned now than they were in 2018, and Milei has the advantage of riding this honeymoon in international financial markets.”

       The problems between Caputo and the IMF began almost immediately after former president Mauricio Macri appointed him to lead the central bank in June 2018 after previously serving as finance chief.

       Caputo, a veteran of Wall Street, had opposed Argentina’s initial approach to the lender earlier that year, a position that along with his lack of monetary policy experience caused IMF staff to see his appointment as “another big mistake by Macri”, former negotiator Alejandro Werner wrote in a book published last year. — Bloomberg