Stiglitz: Argentina and the IMF turn away from austerity

Last edited Wed Feb 2, 2022, 12:42 PM - Edit history (1)

Last week’s agreement between Argentina and the International Monetary Fund (IMF) to restructure a record high 2018 loan brought the country and the world back from the brink of defaulting, which could have threatened the international financial system’s stability.

As with any negotiated agreement, it was not ideal. But both sides clearly understood the dangers of falling into the abyss of the unknown: What would happen if an agreement was not reached?

Most important, the IMF did not insist, as it usually does, on austerity. The agreement instead provides Argentina with room to continue its economic recovery.

What makes this agreement so important is it may set a precedent for dealing with debt restructuring and financial crises that could arise in the pandemic’s aftermath.

At: https://foreignpolicy.com/2022/02/01/argentina-imf-austerity-debt-economics-inflation/

"The debt is owed to the people, not the IMF": Left-wing demonstrators in Buenos Aires protest ongoing negotiations with the IMF over a record, $45 billion bailout debt.

President Alberto Fernández, who inherited the debt from right-wing predecessor Mauricio Macri, has ruled out default as a policy option however - instead lauding the pre-agreement reached on Friday as being "free from restrictions on our development."

The bailout, borrowed by Macri during his failed, 2019 re-election bid, was reportedly granted at former President Donald Trump's behest - over the IMF board's objections.

The deal remains subject to approval by the IMF board and Argentina Congress - where the pro-Macri wing, seeing political benefit in default, may join far-left lawmakers in voting the bill down.