The agreement with the IMF "should be declared null"

A legal analysis prepared in London by two prestigious jurists on the IMF Stand By Agreement with Argentina in 2018 conclude that should “be considered void” because it is “a violation of the fundamental purposes of the IMF, according to its founding agreement. “” Given that Argentina does not have the resources to repay the program, there should be a period (perhaps greater than 10 years) that allows the country to recover. This means in practice establish an interest-free loan, and the return of all interest and charges (paid) to date“, recommends the British study, taking into account the irregularities and acts outside the law that involved the approval of the stand-by agreement between Argentina and the IMF.

In the last hours, this 38-page document (in its original version, in English) circulates in different specialized professional fields, in international financial centers and in the country. Y It is also being analyzed in official offices in Argentina, where it is considered to be “the first professional study that incorporates all the macroeconomic questions, raised up to now, to a comprehensive legal evaluation; not only within the framework of international economic law but also the internal statutes and laws of the Fund itself. Monetary”.

The analysis is signed by Karina Patricio Ferreira Lima and Chris Marsh. The former is a researcher at the Law School of the University of Leeds, Great Britain, and a professor of international economic and financial law. He also has a doctorate in debt restructuring from the University of Durham (England). Marsh is a macroeconomist (Cambridge, England) and a former IMF official.

Already from the Summary, the report by Ferreira Lima and Marsh maintains that “the Stand-By Agreement with Argentina in 2018 represents the largest program in the history of the Monetary Fund. However, it failed in all its central objectives, violating the fundamental purposes of the IMF according to its Articles of Agreement and, therefore, constitutes a ultra vires act“. It is explained that the ultra vires act it is “the international legal principle that considers invalid the acts of public or private entities that go beyond the limits of the law.” That is, the international legal principle that would lead, once its existence has been proven, to declare the 2018 Stand By Agreement “void”.

Furthermore, the analysis draws on the principles of macroeconomics “to show how these substantive rules were violated by the Stand By Agreement in a way that is too overt to be open to reasonable doubt“. He immediately highlights that” thus increases the suspicion that the approval of the agreement was an act ultra vires “.

“In particular, the agreed program was characterized by assumptions and egregious accounting errors, inconsistencies that meant that the objectives were impossible to reachr “, he maintains. He summarizes his negative evaluation of the Stand By Agreement in the following points:

* Analyzing the macroeconomic fundamentals of the Acuirdo, the substantive requirements for the exercise of the functional competence of the IMF to support Argentina’s balance of payments were not met.

* The initial financial program did not contemplate an external adjustment, it had unrealistic assumptions and an accounting “black hole” of at least $ 20 billion. All this made the quantitative objectives of the program impossible to meet.

* Debt sustainability analysis was doomed to fail, and the exceptional access criteria were not reasonably evaluated.

* It was reasonably foreseeable that the program design would lead to a extension of the duration and degree of the balance of payments imbalance of Argentina due to lack of requests for capital controls, which the Fund was legally obliged to request. The Fund reasonably assessed the risk that its general resources would be used to finance large or sustained capital outflows, as indeed they did.

* There was ridiculous assumptions about capital inflows during the program, plagued by internal inconsistencies and including confidence in financial capital inflows of nearly $ 80 billion.

The report concludes by stating that, “in summary, the program should be considered null. Given that Argentina does not have the resources to repay the program, there should be a period (perhaps greater than 10 years) for the country to recover. This means in the practice establishing a program with an interest-free loan, and the return of all interest and charges (paid) to date. “

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