The crazy projections of the IMF and Together for Change

The International Monetary Fund and Together for Change are on the same side again. They put conditions on the Government to fix the problem they generated between the two, an unpayable debt of 45 billion dollars. The criteria they used to speedily approve that agreement, with their backs turned to the Argentines, without going through Congress, are the same ones they want to impose now in the negotiation: fiscal and monetary adjustment, generation of exportable balances to obtain foreign currency to pay the debt, electricity and gas tariffs, removes withholdings on agricultural exports and lowers even the minimum expression of the tax on Personal Assets.

What does Together for Change ask for?

“We can accompany an agreement with the IMF if it is reasonable”, raised Patricia Bullrich as the political line of Together for Change. After her, the deputies Luciano Laspina, Martín Tetaz, Ricardo López Murphy, Cristian Ritondo, among others, and the former Minister of Energy, Juan José Aranguren, gave content to that expression with the presentation of projects in Congress and proposals before the public opinion on what should be done with the economy.

“The electrical system fails due to lack of investment due to the delay in tariffs”, said Aranguren, while Mauricio Macri and María Eugenia Vidal criticized the current blackouts and gave credence to the argument of the former CEO of Shell, ignoring the tariff increases and the serious service cuts that occurred between 2016 and 2019.

Laspina and the other deputies, for their part, complained about the fiscal pressure and presented an initiative to radically lower the tax on Personal Assets, as they had already done in the Cambiemos government. “The lower middle class will be especially benefited by increasing the non-taxable minimum to 10 million pesos“, a post by deputy Gerardo Milman came to the absurd where he lists the main aspects of the project. The lower middle class falls under the monotax, far from the assets required to pay for Personal Assets, which currently reaches only 500 thousand wealthiest taxpayers in the country.

“The agreement with the Fund cannot be ‘get in the car and let’s kill each other together'”, said Ritondo, president of the block of deputies of the Pro. The loan for 57 billion dollars that the Macri government signed at the time, of which 45 billion were disbursed because Alberto Fernández refused to continue raising the amount of the debt, it was exactly that: getting into Argentina in a car that crashed. The cost of repairing it will weigh on for generations.

As a reference, building 140 kilometers of highway on routes 11 and 56, which lead to the Buenos Aires coast, required 185 million dollars that the current administration put up. It is less than 0.5 percent of Macri’s credit with the Monetary Fund to carry out a work expected for decades. Of the 45 billion that Cambiemos received, nothing was left, since the foreign currency was taken by financial speculators who had come in 2016 and 2017 attracted by high interest rates.

The IMF endorsed that process and did not object to delivering the money. The economic plan designed by Nicolás Dujovne and Federico Sturzenegger, in tune with the organization’s proposals, should achieve the stabilization of the economy, which had been shaken from devaluation to devaluation, and put the country on its feet. Macri was so enthusiastic that he even asked Argentines to fall in love with Christine Lagarde, the head of the IMF.

The comparison of the projections of the program that was agreed in 2018 with the results that were actually produced serves to evaluate the reasonableness of the applied policies, which to a large extent are the same as Together for Change and the IMF demand from the government of the Front of All: a severe fiscal and monetary adjustment to begin with, and to this the current opposition adds doses of tariffs for public services and reduction of taxes on concentrated sectors.

All the accounts went wrong for the IMF

There was no lack of optimism in that agreement. As expected by the Argentine technicians and the IMF, thanks to the financial support the national economy would come out of the crisis and achieve a 2.8 percent growth in 2019. “After four downward revisions, the Fund lowered its estimate to a 1.3 percent GDP contraction. But that forecast also failed: activity fell 2,3 percent”, reviews the latest report from the Research Foundation for Development (FIDE).

“Similarly, the agency indicated in its first study that the total public debt as a percentage of GDP for 2019 would be 50.6 percent. After several upward modifications, in the last projection it was indicated that it would be 76.9 percent. This was not fulfilled either: public debt as a total percentage of GDP for 2019 resulted from 88.1 percent“, adds the study.

“As for inflation, the Fund expected in the projections of the original stand-by agreement that in no case would it exceed the 30 per cent, rising to 12 percent in 2020, nearly single digits. And although this approach was corrected in the various subsequent revisions, in no case did it come close to what finally happened. The reality indicated for 2019 an inflation of 53.8 percent“recalls FIDE. It is the highest record in more than thirty years, even above 50.9 percent in 2021, an intolerable level that was motivated by the coronavirus pandemic and its impact on rising prices. international prices of food, energy, logistics and industrial supplies, which is why even the United States last year endured the highest inflation since 1982, with 7 percent, and the same happened in the vast majority of countries. none of that, with 45 billion in financing, inflation went to 53.8 for Macri and his neoliberal economists.

“The IMF also estimated optimistically in the first version of the agreement the level of reserves for 2019, which would reach 75 billion dollars and growing. Later, that estimate was reduced. In the last review of 2019, Argentina was expected to close with reserves of 59.7 billion dollars. However, the balance was much smaller, only
44.8 billion. That is to say, the organism systematically erred the projections for being excessively optimistic“, concludes the document.

The opposition is now turning to accept a briefing on the progress of the negotiations with the Minister of the Economy, Martín Guzmán. All very reasonable.

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