(Bloomberg) -- Argentina is talking with the International Monetary Fund about the outline of a new program that would bring fresh cash to speed up its exit from capital controls, according to a senior government official.

The Fund is pushing the government to let the currency devalue faster under its so-called “crawling peg,” and keep interest rates above inflation, currently running around 250%, the official said, asking not to be identified discussing sensitive talks. Argentina’s government, under newly elected President Javier Milei, says it wants to get rid of the country’s capital controls, and more IMF money offers the fastest route to that. 

Argentina’s Economy Minister Luis Caputo denied any negotiations with the Fund at the moment, adding however that the Washington-based lender is “open to exploring a new program.”

An IMF official said it’s too early to discuss precise program modalities.

Milei is under pressure just months into his presidency, with the economy shrinking and prices soaring. Argentina already owes the IMF some $44 billion, the legacy of an earlier program that went off track. 

Argentine officials met with IMF Managing Director Kristalina Georgieva Wednesday on the sidelines of the G-20 finance ministers meeting in Sao Paulo. Georgieva’s top deputy, Gita Gopinath, met with Milei in Buenos Aires last week too, but denied in interviews with Argentine newspapers that she discussed a new program.

As officials weigh whether to pursue a new program, Argentina is careening into another recession with an inflation rate that’s one of the highest in the world. While Milei enjoys ample IMF support and praise from international investors, he’s facing growing resistance on the ground from labor unions and congress over the aggressive spending cuts at the center of his agenda.

A new program would be Argentina’s 23rd agreement with the IMF in a long history of deals that have failed to put the crisis-prone economy on a sustainable path. Milei inherited the current IMF program from his predecessor Alberto Fernandez, whose government routinely missed targets laid out in the plan. The IMF approved waivers and continued to disburse money.

(Updates with comments from Argentina’s economy minister and IMF. A previous version of this story was corrected to clarify Argentina is in talks with the Fund, not officially negotiating new program.)

©2024 Bloomberg L.P.