• About Us
  • Who Are We
  • Work With Us
Monday, May 29, 2023
No Result
View All Result
NEWSLETTER
The Globe Post
39 °f
New York
44 ° Fri
46 ° Sat
40 ° Sun
41 ° Mon
No Result
View All Result
The Globe Post
No Result
View All Result
Home Featured

Renewed Crisis in Argentina Puts IMF Under Fire

Staff Writer by Staff Writer
09/11/19
in Featured, World
Christine Lagarde

IMF chief Christine Lagarde. Photo: Cristobal Bouroncle, AFP

Share on FacebookShare on Twitter

Despite a history of many IMF rescue programs, Argentina once again faces a deepening financial crisis, raising questions about whether the Washington-based lender has done more harm than good in its dealings with Latin America’s third-largest economy.

The International Monetary Fund, which last year approved a record $57 billion loan for Argentina in exchange for sweeping austerity reforms, is in the eye of the storm after President Mauricio Macri suffered a crushing defeat in the August 11 primary elections.

The victory of Peronist candidate Alberto Fernandez put Macri’s reelection in serious jeopardy, and threw financial markets into turmoil, worsening the already grim economic outlook.

Macri requested a loan from the IMF in April 2018 after a run on the currency weakened the peso and worsened the ongoing financial downturn.

Despite early signs the reforms he implemented were stabilizing the economy – and amid the optimistic analysis from the IMF – prices soared and job losses accelerated, sparking outrage and protests in a country with a long, fraught history with the fund.

Argentina has one of the highest inflation rates in the world at 55 percent, while unemployment has risen to 10.1 percent this year and a third of the population lives in poverty.

“Everyone involved really, really should have known better,” Nobel Prize-winning economist Paul Krugman said on Twitter in a thread he titled “Crying for Argentina.”

He accused Macri of shying away from necessary steps for fear of the political blowback, saying he was “unwilling to take the heat for large budget cuts.”

Macri’s reluctance may have been understandable, given the antagonism towards the IMF and its austerity requirements, even though the fund this time has insisted on protecting spending for social programs.

“Macri either couldn’t or wouldn’t bite the bullet,” Krugman tweeted, deploring the increase in foreign debt.

Suffering and Hardship  

 Mark Weisbrot, an economist at the Washington-based Center for Economic and Policy Research, has a different critique of the policies championed by Macri and IMF.

While Krugman argues that Macri did not go far enough in implementing the IMF’s program, Weisbrot takes the view that the program was fundamentally flawed from the start.

“The macroeconomic policies prescribed in this program are not worth the risks and human costs that they introduce,” Weisbrot and his colleague, Lara Merling, wrote in a December analysis, noting the “increased suffering and hardship” for millions of Argentinians caused by sharp budget cuts.

While the markets reacted poorly to Fernadez’s electoral success, Weisbrot does not see cause for alarm. In an August op-ed for The New York Times, he notes that under prior left-wing governments, poverty declined dramatically GDP per person significantly as the state implemented social programs that improved the lives of ordinary Argentinians.

“By comparison, poverty has increased significantly, income per person has fallen, and unemployment has increased during Mr. Macri’s term,” he said.

Tarnished Image 

Other experts offered a wide range of critiques of the IMF’s actions.

“The decision to grant Argentina a loan of this size was much more political than technical. The fund is like that; it’s always been like that,” economist Monica de Bolle told AFP.

Macri’s “incremental” strategy involved “a lot of risk,” which the IMF recognized, said de Bolle, who worked as an economist for the lender during Argentina’s 2002 crisis.

“The IMF’s image suffered from this excess of optimism,” said the economist, now a researcher at the Peterson Institute for International Economics in Washington.

Jayati Ghosh, an economics professor at Jawaharlal Nehru University in New Delhi, agreed that the fund has “a long history of policy mistakes.”

But Claudio Loser, an Argentine economist who served as the head of IMF’s Western Hemisphere department from 1994 to 2002, played down the fund’s responsibility for the country’s failings.

He blamed Macri for policy mistakes, particularly at the start of his term, saying he should have reached out to the IMF at the end of 2017 instead of waiting until last year.

Loser told AFP however that while the IMF was “clearly not” responsible for the latest crisis, it had loaned Argentina too much because “the management of the IMF wanted to have a big success.”

“Unfortunately, the Argentines more than the IMF failed because they never accept the idea that adjustment is inevitable and takes time,” he said, claiming the country’s political opposition and trade unions are “skilled at destabilizing governments.”

‘Head Over Heels’ for Macri 

Benjamin Gedan, the director of the Wilson Center’s Argentina project, said that “some of Macri’s errors were foreseeable, such as borrowing so massively, and in dollars.”

But the “deeper and quicker” budget cuts that some called for could have provoked a political crisis.

“The IMF seems to have overlooked doubts about Argentina’s debt repayment capacity because key board members, including the United States, had fallen head over heels for Macri,” he said.

Macri, who came to power after promising to change the protectionist policies of his predecessor Cristina Kirchner (2007-2015), won over U.S. President Donald Trump‘s representative in the institution, as well as IMF chief Christine Lagarde herself.

Lagarde, who leaves the IMF this week to take over leadership of the European Central Bank later this year, admitted in June that the fund had “underestimated” the severity of Argentina’s “incredibly complicated” economic challenge.

An IMF spokesperson told AFP the fund’s focus “has been and remains on helping Argentina during these challenging times.”


More on the Subject 

Will the Meek Inherit Argentina in 2019?

 

ShareTweet
Staff Writer

Staff Writer

AFP with The Globe Post

Related Posts

Pro-choice activists celebrate after the Senate approved a bill to legalize abortion outside the Congress in Buenos Aires on December 30.
World

Argentines Celebrate as Senate Passes Landmark Abortion Bill

by Staff Writer
December 30, 2020
Argentinians celebrating a bill that legalizes abortion.
World

Amnesty Gathers 250,000 Signatures for Legal Abortion in Argentina

by Staff Writer
December 17, 2020
Diego Maradona
World

Argentines Mourn Maradona Amid Economic Crisis and Pandemic

by Staff Writer
November 26, 2020
Argentina's President Alberto Fernandez
Opinion

Argentina and the IMF: Who Is at Whose Mercy?

by Robert Haywood Scott and Kenneth Mitchell
February 19, 2020
An angry crowd of Haitians confront a group of Brazilian UN peacekeepers
Opinion

Haiti’s Political Disaster: An Internationally Sponsored Crisis

by Vincent Joos
December 23, 2019
Three Killed in Mass Anti-Government Protests in Colombia
Featured

Third General Strike Keeps Pressure on Colombia’s Duque

by Staff Writer
December 5, 2019
Next Post
Migrants hang from a boat as they wait to be rescued in the Mediterranean Sea, some 12 nautical miles north of Libya,

Inside Lampedusa, the Front Line of Europe's Migration Crisis

europe, migrants, refugees

Italy Pushing for Automatic EU Migrant Sharing System

Recommended

A noose is seen on makeshift gallows as supporters of US President Donald Trump gather on the West side of the US Capitol in Washington DC on January 6, 2021

Militia Leader Gets 18 Years in Prison Over US Capitol Attack

May 26, 2023
Customers queue to enter a re-opened Zara clothes shop

EU Targets Fast Fashion in Push for Durable Goods

May 23, 2023
A billboard showing the debt limit is seen in Washington, D.C.

US Republicans Upbeat on Prospects for Debt Deal

May 19, 2023
Military hardware rolls through Dvortsovaya Square during a Victory Day military parade in central Saint Petersburg

Pressing Russia, US Shares Nuclear Warhead Data Under Treaty

May 16, 2023
A man holding a gun

The NRA’s Continuing Agenda of Fear

May 12, 2023
US Panel Recommends Nonprescription Use of Contraception Pill

US Panel Recommends Nonprescription Use of Contraception Pill

May 11, 2023

Opinion

A man holding a gun

The NRA’s Continuing Agenda of Fear

May 12, 2023
US Supreme Court Justice Clarence Thomas

A Supreme Folly 

April 24, 2023
Transgender Army veteran Tanya Walker speaks to protesters in Times Square near a military recruitment centre

Tennessee Is A Drag on the First Amendment

March 26, 2023
Chinese President Xi Jinping

China’s Path to Economic Dominance

March 15, 2023
An earthquake survivor reacts as rescuers look for victims and other survivors in Hatay, a Turkish province where hundreds of buildings were destroyed by the earthquake

Heed the Call of Our Broken World

March 1, 2023
Top view of the US House of Representatives

‘Cringy Awards:’ Who Is the Most Embarrassing US House Representative?

February 13, 2023
Facebook Twitter

Newsletter

Do you like our reporting?
SUBSCRIBE

About Us

The Globe Post

The Globe Post is part of Globe Post Media, a U.S. digital news organization that is publishing the world's best targeted news sites.

submit oped

© 2018 The Globe Post

No Result
View All Result
  • National
  • World
  • Business
  • Interviews
  • Lifestyle
  • Democracy at Risk
    • Media Freedom
  • Opinion
    • Editorials
    • Columns
    • Book Reviews
    • Stage
  • Submit Op-ed

© 2018 The Globe Post