Monday, March 12th 2012 - 07:29 UTC

End of a long stormy relation: IMF to close office in Buenos Aires

In a surprise move the IMF has decided to close its office in Buenos Aires and Argentine issues will be managed and formally addressed from Peru, according to a report from La Nacion, quoting IMF sources.

Nestor Kirchner, a turning point in relations with the IMF

This is the second time in recent years that such a drastic decision was taken. The previous was in 1994 with President Carlos Menem, but only lasted for six months, since quite soon Argentina was back again requesting financial support.

According to La Nacion IMF sources preferred not to talk about the tense relations between Argentina and the IMF, only arguing that the Fund’s strategy since the outbreak of the international crisis has been to concentrate human and financial resources to those areas where they have financial or technical assistance programs.

“The main focus now is in Europe and that is where some of the offices to close in South America will be located” said the sources.

The local IMF economist Mexican born Maria Gonzalez Miranda (who is also representative before Uruguay) will return to Washington and report to Nicolas Eyzaguirre who is responsible for Latam.

Argentina-IMF relations have been stormy, to say the least.

In November 2001, days ahead of the major default the IMF suspended all assistance to Argentina. And in 2005, then President Nestor Kirchner, having agreed with then IMF Managing Director Rodrigo Rato, repaid all pending loans and cancelled the whole debt. Kirchner presented the event as a corner stone for political independence and financial sovereignty.

A year later was the IMF last review of the Argentine economy in the framework of Article IV, which is done annually in all IMF member countries. In 2007 the Kirchner administration started to manipulate the inflation index and other stats, the exchange of information with the IMF ceased. The IMF then started to openly mistrust Argentina’s Indec indexes given the strong divergences between those figures and those elaborated by private consultants and at least ten provinces.

An Argentine judge then called on the IMF to clarify its statements, but alleging diplomatic immunity the Fund ignored the demand but was very disappointed with the whole incident.

The last chapter dates back to 2010, when other members of the IMF board asked for sanctions on Argentina for not publishing ‘transparent or adequate” stats based on international criteria. President Cristina Fernandez yielded and a technical cooperation agreement was signed between the IMF and Indec to improve stats, showing results in 180 days.

However the 180 days were up last January. And the IMF board questioned the poor results and made several recommendations, but with no sanctions, yet. But Argentina accepted a review of its financial system, which is one of several tasks of the IMF with all its member countries.

Summing up, Argentina is the only G20 member that does comply with IMF commitments; the Cristina Fernandez administration is very critical of the IMF austerity programs and claims greater emerging countries representation in the management of IMF.

18 comments Feed

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1 willi1 (#) Mar 12th, 2012 - 09:04 am Report abuse
The question is: For whom is it a shame? For Arg. or for the IMF?
The arg. government is partly a criminal gang in financial belongings and the IMF a teethless tiger. Both are unnessecary in arg.
2 GreekYoghurt (#) Mar 12th, 2012 - 10:19 am Report abuse
The question is: What is Nestor's lazy eye looking at?
3 GALlamosa (#) Mar 12th, 2012 - 11:30 am Report abuse
#2 A small fortune in Calafate ?
4 GreekYoghurt (#) Mar 12th, 2012 - 11:32 am Report abuse
@3 One eye on public opinion, and the other eye on your massively increasing private wealth (all gained whilst in office of course)
5 ChrisR (#) Mar 12th, 2012 - 11:52 am Report abuse
2 GreekYoghurt

A bit like Jack Elam without the intelligence and charisma that Jack had.

No wonder the Mad Bitch is bipolar: it comes from wondering whether he was looking at her or the hot bit in the office. :o)

Glad the IMF woke up at last though.
6 ElaineB (#) Mar 12th, 2012 - 11:59 am Report abuse
Maybe they know the shit is about to hit the fan and they are moving to safer ground?
7 PirateLove (#) Mar 12th, 2012 - 12:09 pm Report abuse
“In 2007 the Kirchner administration started to manipulate the inflation index and other stats,”

history repeating itself?
8 GreekYoghurt (#) Mar 12th, 2012 - 01:23 pm Report abuse
@5 I suspect Jack might have done more for the Argentinians to be honest.

The IMF leaving is a good thing. G20 will probably be next in excluding them, and then the WTO. We can just sit there and watch it happen.
9 yankeeboy (#) Mar 12th, 2012 - 02:46 pm Report abuse
I'm wondering why the IMF had an office in Arg for the last 8 years! What were they doing all that time?
All of these items that the Ks have put off for so long hoping they would go way are all coming to a head. It is bad timing with the economy faltering/failing and then all of the Int'l Orgs coming after them too.
CFK asked to use U$20B ( 1/2) of the BCRA reserves to meet current funding issues and pay off the Paris club etc. this year. Last time their reserves were this low the economy crashed. Time will tell but it doesn't bode well for the short to medium term.
10 Idlehands (#) Mar 12th, 2012 - 03:12 pm Report abuse
Is there a grammatical error in the last paragraph?

“Summing up, Argentina is the only G20 member that does comply with IMF commitments” doesn't sound right unless I'm missing the point?
11 ChrisR (#) Mar 12th, 2012 - 03:27 pm Report abuse
10 Idlehands

Well spotted, I automatically read it 'correctly' in that they are the only G20 that does NOT comply!
12 GreekYoghurt (#) Mar 12th, 2012 - 03:32 pm Report abuse
@10 It's not going to be G20 for much longer. That's for sure.
13 Wireless (#) Mar 12th, 2012 - 04:24 pm Report abuse
Will it even make G77?
14 Philippe (#) Mar 12th, 2012 - 04:38 pm Report abuse
A concrete proof that the IMF is well-directed and well-managed.
God save the IMF!


PS. FCO: please take note
15 briton (#) Mar 12th, 2012 - 10:39 pm Report abuse
another friend lost by argentina,
at this rate she will have none left,, if indeed she had any in the first place,
just a lonly thought .
16 Pirat-Hunter (#) Mar 13th, 2012 - 10:38 pm Report abuse
There is a good reason for IMF to leave Argentina.

After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the “Hot Money” cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

“The result was predictable,” said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.

At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, “The IMF riot.”
17 JB (#) Mar 14th, 2012 - 09:06 pm Report abuse
18 British_Kirchnerist (#) Mar 15th, 2012 - 10:46 am Report abuse
#14 Aye right.
You couldn't make some of this stuff up!

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