BUENOS AIRES, Argentina: Argentina has struck a major deal with the International Monetary Fund (IMF), securing a US$20 billion loan package and rolling back strict currency controls that have shaped its economy for years.

The agreement, signed late last week, includes a 48-month Extended Fund Facility. The IMF will disburse $12 billion by April 15, with an additional $2 billion expected by June.

"Key pillars of the program include maintaining a strong fiscal anchor, transitioning towards a more robust monetary and FX regime, with greater exchange rate flexibility," the IMF said in a statement. The deal is also expected to help Argentina regain access to international capital markets and attract further multilateral and bilateral support.

Ahead of the deal's approval, Argentina's central bank announced a major policy shift. Starting April 14, it scrapped the fixed currency peg, allowing the peso to float within a band of 1,000 to 1,400 pesos per dollar, compared to 1,074 at the April 11 close. The band will widen 1 percent each month.

The government will also dismantle significant portions of the capital controls, known locally as the "cepo," which have long restricted access to foreign currency. Businesses will now be allowed to repatriate profits.

"As of April 14, we were able to put an end to the foreign exchange restrictions which were imposed in 2019 and which limit the normal functioning of the economy," Economy Minister Luis Caputo said.

President Javier Milei, addressing the nation in a televised speech, said Argentina was "in a better position than ever to withstand external turbulences."

Still, the IMF cautioned that "downside risks remain elevated," pointing to global trade tensions and domestic political volatility in a year of legislative elections.

The new currency regime could result in a sharp devaluation if the peso drops to the lower end of the band. "This is a devaluation, which rather goes against what the government would have intended to calmly get to elections," said economist Ricardo Delgado. "It's a bit surprising that at this time of global volatility, the controls are being lifted."

The IMF deal is Argentina's 23rd with the lender. Additional support will include $12 billion from the World Bank and $10 billion from the Inter-American Development Bank.