Three years after the return of the IMF | Discussion topics. How to negotiate with the multilateral organization

Production: Natali Risso

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The greatest in history

For Itai Hagman

June 20 marked the third anniversary of the largest borrowing in the history of the IMF, of which we are the protagonists. Paradoxically, the same date on which we commemorate Manuel Belgrano, one of the greatest patriots in the struggle for independence and the first benchmark of Argentine economic thought, coincides with that of Argentina’s return to the IMF. That day, the Fund accepted a loan of $ 50,000 million with our country. However, for Macri’s economic administration this was not enough, a few months later the deal amounted to $ 57,000 million. This figure represents 1,277% of the country’s quota, which makes the loan exceptional.

In 2006, under the presidency of Néstor Kirchner, Argentina had canceled all of its debt with the IMF, how much, barely more than a decade later, has our country become the main debtor of the organization? In the economic field, the agreement with the Fund crowned the failure of an absolutely erroneous diagnosis and a huge mistake in economic policy. Macrismo believed that it would be enough to give “friendly signals” to the world and to make the markets more flexible for dollars to abound in Argentina. Far from it, trade and financial openness has generated a debt flight which has been maintained at the cost of becoming the emerging country which was most indebted in foreign currencies in 2016 and 2017. In addition, the influx of speculative capital that came to take advantage of local interest rates and then take more dollars than they entered, in a strategy called a financial bicycle or carry trade. In April 2018, the exodus of this speculative capital and the inability of the BCRA to manage the exchange rate race led to a huge devaluation process. In this context, the private sector stopped lending to Argentina and private debt was replaced by new debt. This is how the IMF and its terms came back.

Politically, the causes of this agreement must be sought in the alignment of the Macri government with the government of Donald Trump, as expressed in his own book the former Argentine president or high-level officials like the former director of the Council by Claver. -Carone White House Security. The political initiative of this agreement was evident from its inception due to the disbursement schedule: 89% would be before October 2019, although after the PASO outcome, the Fund postponed the disbursement of 5,400 million corresponding to September 2019. The International agency financed the most expensive electoral campaign in history.

Macrista’s economic failure has left more poverty, more unemployment, a smaller economy and a larger $ 100,000 million debt, almost half of which is the deal with the Fund. Even so, the scandal of the loan with the IMF does not lie only in the volume but in the negligence shown by the Monetary Fund itself in its execution. The best-known case is the violation of Article VI of its statutes, which explicitly mentions that no member country can use the general resources of the Fund to cope with a considerable or continuous outflow of capital, as has happened. incidentally produced in the case of Argentina. Between the time of the deal and December 2019, the leak amounted to $ 41,000 million.

The final disbursements of the agreement were to be made in 2020. However, the government of Alberto Fernández decided not to continue with the pending disbursements, so that the IMF ultimately disbursed $ 44,000 million out of the 57,000 agreed. by Macri. Of the loans, 38,000 million, not counting interest, must be repaid until 2023.

In the year of the pandemic, debt to the private sector was restructured in order to defer and reduce payment. The IMF chapter is still being resolved. Argentina seeks a way of reasonable payments and without political conditions which undermine the economic independence of the country. It is essential that the discussion with the IMF not lose sight of the fact that Argentina’s current priority is to improve the living conditions of its people after difficult years. The previous government and the Fund are jointly responsible for what happened and this must be present in the negotiations.

* National FdT deputy, economist and director of OCEPP.

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No more debt and dependency

By Fernanda Vallejos (**)

Three years ago ended one of the most painful chapters in our recent economic history: Macri reestablished the bond of submission with the IMF.

Once again, the flight – and not the development investment – was the destination of these funds. The marriage between debt and flight, a constant in the neoliberal phase of our history, is repeated over the period 2015-2019: the BCRA’s Foreign Exchange Balance shows a Formation of Foreign Assets (FAE, net) of more than 88 000 million dollars; while, according to Indec’s balance of payments, the growth of Argentina’s foreign assets exceeded 103 billion dollars.

Argentina arrived at the end of 2019 with the burden of unsustainable debt and alarming indicators of unemployment, poverty and inequality: a notable setback compared to the progress made between 2003 and 2015. The pandemic has exacerbated the socio-economic crisis. economic. However, Argentina has restructured its debt to private companies, saving $ 38,000 million, reducing the average rate from 7 to 3% and a grace period essential to face the crisis and face reconstruction before paying. again. An agreement was recently reached with the Paris Club, delaying the payment of $ 2 billion until March 2022.

It is because the pandemic obliges States to face urgent responses, which make the privileged payment of the debt incompatible with the priority of taking care of life and health, first of all, and with economic reconstruction, then. It should be the first frame of reference for the settlement of a debt contracted in violation of the constitutional mandate and Argentine laws that govern the subscription of public debt, for which, moreover, it should be investigated. court to determine the criminal liability and assets of former officials.

The Stand By for $ 50,000 million in June 2018, raised 4 months later to $ 57,000 million, represented 1,277% of Argentina’s quota. Disbursements reached 44,000 million dollars, just under the 50,000 million dollars with which the IMF helped by the pandemic, during the year 2020, more than 80 countries.

To qualify a loan that exceeded the maximum limit, there had to be rigorous analysis, which did not and could not have existed in the meager one-month period in which the unprecedented largest loan of the history of the organization has been approved, going beyond the experiences of Greece (2013) or Portugal (2014). The exposure to a single country explains the exception: at the end of 2019, the loan represented 47.6% of the IMF’s portfolio. At present, the 4 biggest debtors after Argentina, together, do not add up to our country’s debt with the agency.

After the first disbursement, the BCRA announced the auction to “allocate the dollars, including those coming (…) from the IMF”. Cancellation of peso debt with these funds allowed speculators to dollarize and escape their profits. From the first disbursement to the end of Macri’s mandate, between the AWF and the outflow of “portfolio” capital, $ 6,000 million more than all disbursements escaped, violating Article VI of the founding agreement organisation.

The agreed terms for payment are simply and simply impractical. No one in their right mind could assume that our country could pay $ 44,000 million, or two-thirds of our annual exports, between 2021 and 2023. It is still as unreasonable that, faced with a loan that exceeds the agency’s rules, Without the approval of Parliament and in order to finance the theft, it is planned to be confined to the conventional terms and conditions of an Extended Facility Credit, to repay a debt for which the disbursements made represented double what the country should have. get. Less, by pure mathematics, overlapping these payments with the dates of restructuring with private companies, validated by the IMF. Even less in the event of a pandemic, which the agency should weigh when it demands from countries – poor and middle-income – people impoverished and decimated by the virus. The IMF has the legal capacity to adopt special rules (art. V), in the search for a lasting solution to a “special” loan granted under “special” conditions. And he has the political capacity, since he had to “favor President Macri in the search for his re-election”, as recognized by the American representative at the time to the IMF and now president of the IDB, Mauricio Claver. -Carone.