Argentina and the IMF, stumbling over the same stone

Argentina reached this Friday with the International Monetary Fund (IMF) an agreement of extended facilities with which it will replace the stand-by for US $ 44,000 million signed in 2018 and whose maturities were concentrated in 2022 and 2023.

“We had an unpayable debt that left us without a present or a future and now we have a reasonable agreement that will allow us to grow and meet our obligations through our growth,” said Peronist President Alberto Fernández, a critic of IMF policies. .

The third largest economy in Latin America, Argentina joined the IMF in 1956, during the dictatorship of General Pedro Aramburu (1955-58). Since then the country has signed more than 20 plans with the multilateral organization.

In 2006, under the presidency of the center-left Peronist Néstor Kirchner, the country canceled US$9.6 billion that were still owed to the IMF and after that it did not allow more technical visits from the agency, until the loan was signed in 2018. now refinanced.

The new program of extended facilities, which must be approved by Congress, will be the 13th plan of Argentina and the IMF since the return of democracy in 1983.

This is a timeline of the most important moments of the negotiation.

Exchange run and assistance

In the pro tempore presidency of the G20 of Argentina in 2018, with a policy praised by the markets and the main economic powers, especially the United States, the Argentine crisis came as a surprise.

At the end of April of that year, an exchange run began that led the then liberal president Mauricio Macri to ask the IMF for US$50 billion in aid, the largest granted in the history of that multilateral organization. In exchange, the country promised to achieve fiscal balance.

In the first half of 2018 alone, Argentina had lost US$13 billion of its international reserves and the currency had depreciated 34%.

The IMF made a first disbursement of US$15 billion. However, the markets did not show confidence in the Argentine plans and fled towards the dollar. In September 2018, the IMF approved an increase in credit, scheduled for a term of three years, and raised it to US$57.1 billion.

Elections and program suspension

In the midst of an acute economic crisis, Fernández won in the first round against Macri, who ran for re-election in the presidential elections of October 2019. Upon assuming office, in December of that year, he renounced the pending credit tranches, therefore that Argentina’s account stopped at US$ 44,000 million and did not reach the US$ 57,100 million that had been approved.

Already in September 2019, the IMF had suspended a disbursement of some US$5.4 billion, because the government had not met inflation targets, among others. That year, the consumer price index closed at 53.8%.

After the restructuring of some US$66 billion of debt with private creditors, Argentina formally began its new talks with the IMF in August 2020. “I hope that we will soon clear the obstacle that is the debt with the IMF,” Fernández said then. .

Diplomacy and self-criticism

Since taking office, Fernández has deployed an intense diplomatic agenda to obtain support, especially in Europe, for his proposals to renegotiate the debt with the IMF.

Pope Francis, former Archbishop of Buenos Aires, was an important ally and it was precisely in the Vatican where Fernández and Kristalina Georgieva, managing director of the IMF, met face to face for the first time, in a seminar in May 2021.

In December 2021, the IMF recognized that the credit program granted to Argentina in 2018 “did not meet the objectives of restoring confidence in fiscal and external viability and, at the same time, promoting economic growth”, after an evaluation of the loan, required given the amount of the debt.

For this credit, Argentina paid some US$5,000 million in 2021. According to the schedule prior to the agreement announced this Friday, some US$19,000 million remained to be paid in 2022, another US$20,000 million in 2023 and some US$ 4,000 million more in 2024.