The credit of 57,000 million dollars that the IMF granted to the Argentine government in 2018 – of which 44,000 were disbursed – did not meet its main objectives, such as restoring market confidence and reducing fiscal imbalances. It is admitted by the international organization in the technical evaluation report on the program Stand by published this Wednesday.
“The strategy and conditions of the program were not strong enough to correct Argentina’s structural problems, such as fragile public finances, dollarization, high inflation, weak monetary policies, a limited financial sector and a narrow export base,” the report highlights.
The evaluators affirm that the Fund should have been more involved in the application of the program, but they also attribute part of the responsibility to the Executive of Mauricio Macri for the failure in the objectives sought. In their opinion, the absence of measures regarding debt operations and capital movement controls were detrimental, although they believe that their application was complex because it sought to restore market confidence. The IMF also criticizes the existence of communication problems and an excess of optimism in economic expectations. Among them is inflation: the Macrista Executive expected a price increase of 15% for 2018, but that year the CPI climbed to 47.6%, the highest in the last 27 years.
The agency highlights that the credit granted to the South American country did not achieve the progressive reduction of tensions in Argentina’s balance of payments or the protection of the most vulnerable sectors of the population. Although the IMF, at the time chaired by Christine Lagarde, reiterated the importance of this last point, the Argentine economic crisis that began in 2018 and worsened in the two years that followed punished those with the fewest resources particularly harshly. Between 2018 and the end of 2020, poverty grew ten percentage points in Argentina: from 32% to 42%.
The report is released on the same day that the Argentine government made the last disbursement of the year to the IMF linked to the 2018 credit, 1.89 billion dollars for the maturity of capital. The funds came out of the remainder of the 4.334 million in special drawing rights sent in August by the Fund.
The Executive of the Peronist Alberto Fernández will use the harsh evaluation carried out by the IMF as a letter in his favor to negotiate the restructuring of the debt with the Fund and to obtain the support of the opposition for the agreement that is finally reached. Under the current schedule, Argentina must pay $ 19 billion in 2022, a figure it cannot cope with. For this reason, the Extended Facilities program that the Government intends to agree on with the IMF postpones the repayment of the loan until 2026.
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Dialogue with the international organization has become the trigger for numerous fights within the ruling coalition, the Frente de Todos, and also outside, with the opposition. The vice president, Cristina Fernández de Kirchner, heads the sector most reluctant to accept any conditions of the Fund that imply an adjustment. His son, the current deputy Máximo Kirchner, harshly criticized in the Lower House those legislators who were part of the macrista administration during the parliamentary session for the 2022 Budget.
“The president promised to send the agreement with the IMF to Congress. I wish that in the past such debt had passed through this Congress to take care of our democracy. Perhaps it was cowardice that they did not send the project here, ”Kirchner said last Friday. His fiery speech united the opposition and favored the vote on the budget, rejected with 132 legislators against, 121 in favor and one abstention. The defeat of Peronism in the Chamber of Deputies also twisted the Government’s plans to exhibit a certain political consensus regarding the economic program for the next few years.
Once the Government agrees on a new program with the Fund, the agreement must be ratified by Congress. The new configuration of the two chambers that emerged after the opposition triumph in the legislative elections of November 14 left the Government without the control it held in the Senate – despite retaining the majority – and with only two more legislators than the opposition Juntos por el Cambio. in Deputies.
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George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.