January 29, 2022
protest against the IMF in Buenos Aires, photo: Bill Hackwell
Readers should not come away from this editorial in today’s La Jornada thinking that the IMF has somehow reformed itself, it remains as predatory as ever. However it is an interesting development that deserves following as they maneuver from this defensive position. – Editorial
The president of Argentina, Alberto Fernández, announced yesterday that his government has reached an agreement with the International Monetary Fund (IMF) to refinance the 44 billion dollar debt contracted by his predecessor, the right-wing Mauricio Macri. In a message to the nation, the President stated that the agreement reached will allow the country to “grow and comply”, since, unlike the typical arrangements of the Fund, “it does not contemplate restrictions that postpone development, it does not restrict, limit or condition the rights of retirees, it does not force a labor reform; it promotes investment in public works, does not impose a zero deficit, does not impact on public services, does not relegate social spending and respects investment plans in science and technology”.
On the other hand, representatives of the multilateral organization made it clear that they agreed on a “fiscal path” to gradually and sustainably improve public finances and reduce monetary financing, a strategy to progressively reduce energy subsidies and “the framework for the implementation of monetary policy as part of a multiple approach to face the high and persistent inflation”. However, IMF staff discussions with Argentine authorities will continue in the coming weeks, and final agreements will be subject to consideration by the Argentine Congress and approval by the IMF’s executive board.
From the beginning of the negotiations, President Fernández denounced both the unpayable nature of the loan (the amount of which exceeds the total reserves of the Central Bank) and its undeniable political bias. It cannot be forgotten that the loan was granted to the Macrismo government at a time when that ultra-neoliberal administration was sinking in the midst of a brutal depreciation of the currency, uncontrolled inflation, massive closures of companies of all sizes and a growing social repudiation due to massive layoffs in the public sector as well as tariff increases in electricity, domestic gas and gasoline. In this sense, nine former Latin American governors and one Spanish one published a letter in which they demanded the IMF to eliminate the debt overcharges created to electorally benefit Macrismo, as well as to assume its share of responsibility in the granting of a loan that was doomed to failure before the ink was dry.
While waiting for the final version of the agreement to be finalized, the development of events gives a glimpse of the dangers of placing the destinies of a nation in the hands of global economic technocracies more interested in propping up compliant regimes, and in sustaining the profitability of big capital, than in the social and human consequences of their decisions. At the same time, the possibility of debt restructuring without resorting to the well-known shock programs imposed by the Fund would represent a turning point in the organization’s relations with countries, and would set a healthy precedent so that in the future the needs of the majorities will be a priority in all negotiations between creditor entities and debtor nations.
Source: La Jornada, translation Resumen Latinoamericano – English