In the Government they believe that the situation that the country faces due to the debt deserves special treatment. The IMF lent US $ 57,000 million in 2018 and has to repay US $ 44,000 million (it was what the agency disbursed). There is no money to pay and the authorities propose a menu of actions outside the usual menu to cancel the loan. The orders in that sense they have been:
-refinancing of the debt with the IMF to more than 10 years,
-lower the surcharge of interests,
-posting the article IV,
-propose a special mechanism to create a SDR fund (the currency of the IMF) to access cool backgrounds above the quota,
-a special statement not approved by the Board that the debt was not sustainable.
What underlying reason behind all this list of unconventional demands?
The first could be of a strategic nature. The political scientist Ignacio Labaqui called the current political regime election targeting paraphrasing that model of inflation targeting economists, in which everything is subordinated to the Central Bank. Here it is the other way around: the parameters of the economy are at the service of the electoral contest.
The second reason for these special requests is due rather to a belief. The government is convinced that the Argentine debt case is special. Maybe because of its size. Hence the proposals of Cristina Kirchner on March 24, of Guzmán in the IMF and the G-20 and of Alberto Fernández this week from a Zoom. Also in the UN and in the Courts.
Fernández clarified in the week that “I don’t want them to give Argentina a solution.” But then he said that “I want the credit agencies to find a solution not only for poor countries, but also for those in Average Income, who have, like us, 40% poverty, but who we are treated like rich countries that we are not”.
In the world and in the IMF the most flexible aid has been designed for the poorest countries. The rest fits into a wide avenue and within it has done well.
Guzmán will broadcast this week in Europe that Argentina intends to calibrate some rules. Will say that adjustment processes do not work in the country and that the external restriction threatens sustainable growth. The policies of surcharging interest, the distribution of the SDR and the repayment terms of a debt of US $ 44,000 million, exacerbate the situation.
There are arguments to think that the Government is not right. The debt the IMF lent is not as exceptional as it says. For the quota, Argentina would have been entitled to US $ 20,000 million of IMF aid but exceptional access (a criterion of the Fund), triggers being able to ask for double. To Uruguay in 2002 it lent 20% of GDP (half to Argentina) and to European countries in the 2009 financial crisis (Iceland, Greece and Portugal), the aid was much higher than its quotas and in proportion to Argentina.
Some Minister of Economy of a European country could tell Guzmán that the exceptional thing was what the economist Julián Folgar showed recently in tweet: the structural break of Argentina occurred in the 2000s when quintupled the size of the state in ten years. This week the IMF published the Fiscal Monitor report and in its statistics there is no such case. It is true that Macri’s response to lower inflation and adjust these imbalances was also exceptional. The truth is that in Argentina the poverty more than the rest of the region.
In his new book, Dinosaurs and Marmots, the economist Eduardo Levy Yeyati says that “we have to resist these simplifications, Argentina, like any other country, is not rare, nor exceptional. It is hardly complex. And if something characterizes Argentina’s complexity, it is its inconstancy. Just as we went from the recession of the century to Chinese rates, we went from the fatalism of crises to the triumphalism of recoveries ”.
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source https://pledgetimes.com/argentinas-exceptionality-the-government-sets-out-to-rewrite-the-laws-of-global-capitalism/
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