Downtown Buenos Aires has always been good for time travel. First there are the magnificent boulevards, remnants of a glorious past when Argentina was one of the richest countries in the world. At the same time, between the plane trees and cafés, you can also see graffiti on the walls of the house that scolds the International Monetary Fund: “Out with the IMF!” They demand. And you don’t really know: does that still come from the last big crisis? Or did someone vent their anger with a spray can just a few days ago?
In fact, both would be possible. Only 20 years have passed since Argentina suffered one of the biggest national bankruptcies in recent world history in 2001/2002. At the time, many Argentines blamed the International Monetary Fund (IMF), a special agency of the United Nations, for the misery. The organization pumped more and more money into the country, even after the crash had long been inevitable. Argentina has long since repaid its debts from back then, but then took on new ones again in 2018. That’s exactly what you’re supposed to pay back, if you please, with money that you don’t have, of course.
And so the country is fighting again, but above all: about the IMF. In the press, in the squares and since the beginning of this week also in Parliament. There, the deputies have been discussing vigorously for days what to do: postponement of payments – or stoppage of payments? President Alberto Fernández and his economy minister want to avoid a failure at all costs. Argentina’s powerful Vice President Cristina Fernández de Kirchner, on the other hand, is demonstratively silent on the deal. And her son Máximo, who is after all the head of the governing coalition, resigned in protest after an initial agreement between the government and the IMF became known.
On Wednesday evening there is a breakthrough. After concessions, the government announced it had enough votes to make an agreement possible. The fact that the Executive Committee of the IMF also approved the agreement in the end is considered a formality.
He was very tired, Sergio Massa said Wednesday evening on Argentine television. Massa is a member of the left-wing Peronist governing party, Frente de Todos, and heads the Chamber of Deputies, where he has been campaigning for approval in recent days. “We need a solution here so that we can start growing again as a country,” said Massa. Meanwhile, trade unions and social organizations demonstrated in front of Congress. “You have to pay debts – but not cheating!” reads their banners. They reject the current agreement because the loan was not legal.
Whether they are right about that is debatable. When the IMF allowed then-business-friendly Argentine President Mauricio Macri to take on new debt in 2018, it was quite unique. It was the IMF’s 22nd loan program for Argentina, but never before had the financial institution lent so much money to anyone else. In total, it was around 57 billion dollars.
The people of Argentina hardly had anything from the billions
So Argentina of all places, this country repeatedly plagued by crises, got a record loan? What was behind the decision back then is still not entirely clear today, but what is certain is that even experts at the IMF take a critical view of it today: too high, not robust enough, an analysis wrote shortly before Christmas.
But what good is it, the money is gone, drained into the accounts of foreign creditors or Argentine financial speculators. In any case, the people of Argentina hardly had anything from the billions. With the IMF loan, Macri has neither got inflation under control nor stimulated the economy. On the contrary.
In addition to the money from the IMF, he left his successor Alberto Fernández additional debts in 2019, totaling more than $300 billion. No sooner had he set about getting the situation under control than the pandemic hit. More than 40 percent of the people now live below the poverty line, and inflation was last at 51 percent. In such a situation, critics say, one cannot pay foreign debts. Or, to put it in the words of social activist Juan Grabois: “La deuda es con el pueblo” – first the people, then the believers.