The lack of agreement with the International Monetary Fund almost two years after the start of Alberto Fernández’s administration became a matter of debate in the electoral campaign. “I could also agree with the IMF in five minutes, but I could not look you in the eye”Alberto Fernández responded on Friday to Mauricio Macri, who had said that he had enough time to restructure the 45 billion dollar debt that he left as a government inheritance.
“Five minutes was the time it took (Macri) to generate a conflict that will last for generations,” continued the President, speaking at the inauguration of a UPCN sanatorium in Avellaneda. “So that no one gets confused, I too can agree with the Fund in five minutes, but I could never look you in the eye again, because in five minutes I can kneel down and comply with the demands that creditors put on me, and that is not what a Peronist does “. “We represent you, not the creditors”, completed before the union audience.
The Government argues that if it has not agreed with the IMF until now, it is because some of the conditions that it put on the negotiating table have not yet been resolved, such as the removal of interest surcharges. This is the surcharge of about 1000 million dollars per year that the Fund imposes on Argentina for having taken an exorbitant loan of 45 billion dollars, well above what it could aspire for its quota in the organization.
When Macri or María Eugenia Vidal argue that they could fix everything in five minutes, they do not explain why they did not do it before. If they are able to avoid the surcharge, for example, why didn’t they remove it from the beginning?
The truth is that after almost two years of insisting, the government managed last weekend, at the G20 summit in Rome, that the group’s presidents recommended that the IMF analyze the issue. On Thursday, the Fund confirmed that it will do so before the end of the year, at a board meeting.
In any case, the Argentine ambassador to the United States, Jorge Argüello, warned that the Fund’s technicians are against the proposal to remove the surcharge, although he trusts that this will end up happening because of the position taken by the countries in the G20.
“I believe that before March we will have the possibility of closing an agreement under the terms that we are seeking,” said the diplomat. “It is a complex negotiation that is beginning to move in a concrete way,” he added. “We want an agreement that allows us to continue growing. A path that allows us to grow and pay. Grow and pay, in that order “, he remarked.
Another point claimed by the Government is the inclusion in the agreement of a clause that guarantees that Argentina will access a better line of credit from the IMF if it is created in the future. So far, the maximum repayment term offered by the agency’s programs is ten years. Martín Guzmán pointed out that Argentina and other countries are working to achieve changes in that direction, as well as to create a “resilience fund”, with contributions from the powers, for new lines of financing to countries that need it to overcome their crises .
That is to say, the government’s plan is to sustain a negotiating process in the different spheres of the international community, beyond what is established in a first agreement with the IMF, which allows conditions to improve.
The ruling party’s strategy is questioned by the opposition of Together for Change, by the establishment economists, the mainstream media and the financial markets. They consider that the Government took too long to agree and press for an immediate closure, which must include strong commitments to fiscal adjustment, a monetary tourniquet and structural reforms, such as lower taxes on companies, more flexible labor and changes in the pension system.
“We would not have taken two years to make an agreement with the Monetary Fund,” Vidal recriminated. “While we make a fiery speech against the Fund, we have been paying maturities for two years that we could have avoided with a new agreement and lower rates”, he pointed.
Regarding the first point of this statement, in the economic cabinet they explain that another requirement that Argentina puts to sign a new program with the IMF is that it reimburse the payments that the country has been making since September, for 2.3 billion dollars, plus 1.9 billion that it will disburse at the end of December if an understanding is not reached before.
As for interest rates, before that Vidal and Macri should be held accountable for having brought the IMF back into Argentina. No agreement with the Fund would be necessary if the Cambiemos government had not asked for 57 billion dollars.. Along these lines, other basic questions that the opposition and the mainstream press hide are the following:
- Macri decided to turn to the IMF because the markets stopped lending to his government when seeing that the economic program of indebtedness and flight, which they took advantage of as much as they could, was inconsistent and would end up breaking down, as it happened.
- The IMF credit was managed urgently, with its back to society, in the midst of a financial disaster, with the country risk above 2000 points, the interest rate at 80 percent and the dollar out of control.
- By order of the IMF, Macri had to dismiss two presidents of the Central Bank, Federico Sturzenneger and Luis Caputo.
- Mauricio Claver Carone, former representative of the Donald Trump government to the IMF and current IDB president, said the loan was to keep Macri in power and prevent Peronism from winning the elections.
- The loan established that in 2022 it is necessary to return 19,115 million dollars, between principal and interest. And in 2023, 19,367 million dollars. I mean, it was priceless from the beginning.
“There must be a sovereign ignorance of the debt, and this implies a strong mobilization of the Argentine people and in Latin America. Some of this can be seen in what is happening in Chile, Colombia or Peru, where there were strong mobilizations against the adjustment plans, against deeply rooted neoliberal models that were the same as those presented in Argentina. Now there is a strong questioning that comes from the popular mobilization; the only way to think a way out for the great popular majorities is ignorance of the debt “, assured Nicolás Del Caño, when fixing the position of the Left Front.
That stance bears the cost of breaking away from the countries that are part of the IMF, which are essentially the vast majority, including the United States and the other powers. The repudiation of the Fund would compromise access to credits from other international organizations, such as the World Bank, the IDB and foreign investment banks, both for the Nation and for the provinces. The ground gained in the G20 would also be lost and difficulties could arise for the pre-financing of exports and the arrival of investments. Before that, the State would have to manage financial and exchange tensions of magnitude, surely with the blue dollar flying at any price. And looking forward, it would be Argentina’s heaviest record in terms of debt defaults, with an impact for decades. These are questions that the FIT does not finish explaining how they would be resolved.
“How do you pay without the hunger of the people, if the adjustment that Guzmán is making, which continues even after the PASO, is with the hunger of the people?” Aires. And he answered: “They are paying by having cut the IFE, by having cut social assistance by 64 percent.”