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Montevideo, October 25th 2020 - 09:02 UTC

 

 

Cristina Fernández/IMF controversy over the Fund's responsibility in Argentina' flight of capital

Friday, February 14th 2020 - 20:46 UTC
Full article 2 comments
“No comments. We Argentines know how to read”, tweeted Cristina Fernandez, where she published some of IMF's charter articles in support of her argument “No comments. We Argentines know how to read”, tweeted Cristina Fernandez, where she published some of IMF's charter articles in support of her argument
The former Argentine president reiterated that the US$ 57 billion loan to the Macri administration was “illegal” The former Argentine president reiterated that the US$ 57 billion loan to the Macri administration was “illegal”
IMF's Gerry Rice said there was no violation of IMF rules and on “and the capacity of IMF to restructure its debt to postpone repayments, is constrained” IMF's Gerry Rice said there was no violation of IMF rules and on “and the capacity of IMF to restructure its debt to postpone repayments, is constrained”

Argentine vice-president Cristina Fernandez de Kirchner insisted in her criticism of the IMF for the alleged violation of its statutes by awarding the previous Argentine administration of president Mauricio Macri a disproportionate credit, despite the fact the Fund rejected the accusation and ratified that no debt shaving is possible under its rules.

“No comments. We Argentines know how to read”, said Cristina Fernandez in a tweet where she also published some of the IMF founding charter articles to support her original statements in Havana, and now reiterating that the US$ 57 billion loan to the Macri administration was “illegal”.

The IMF charter article IV published by the Argentine ex president says that no member country can utilize the Fund's resources to confront a considerable or continuous flight of capital, which Cristina Fernandez alleges was what happened with a significant percentage of the US$ 44bn loan extended by the IMF to the Macri administration.

The ex president went on to say that the IMF was partly to blame for the current financial situation of Argentina, and demanded a haircut for the reimbursement of the IMF credit. She also recalled that the US$ 57bn credit represented something like 60% of the Fund's available loaning resources, and it was awarded to an only member.

From Washington Gerry Rice, IMF spokesperson said there was no violation of IMF rules and on “the question of debt, the capacity of the IMF to restructure its debt to postpone repayments, repurchases is constrained by our legal and policy frameworks”.

From Havana Cristina Fernandez had defined the IMF procedure towards Argentina as “illegal”, and demanded a haircut.

In the second chapter of the controversy, involving Buenos Aires and Washington, Argentine president Alberto Fernandez on Wednesday was asked about the situation, and elegantly replied that the comments of the ex president were “very much pertinent”.

Cristina Kirchner insisted in her argument, “yes, no haircut can be done because the IMF statute bans it. But it also bans making loans for the flight of capital. Why should one ban be valid, and the other one no?? I want the IMF statute to be applied in all its extension”, and given IMF's mistakes, “they must share the blame”.

Apparently of the US$ 44bn, some US$ 30bn was used by Argentina to repay maturing loans and bonds, and the money ended as flight of capital. The new administration of president Alberto Fernandez estimates that in the four years of the Macri government some US$ 100bn fled overseas from Argentina.

However despite the controversy, Gerry Rice was positive about the current negotiations of the IMF mission in Argentina. He characterized the exchange as a very active dialogue ongoing between IMF staff and the Argentine authorities. “There is a very active dialogue between IMF and Argentine authorities, a dialogue characterized as constructive”.

The spokesperson added, “we share the Argentine government's objective of putting in place policies that stabilize the economy, protect societies most vulnerable and pave the way for sustainable and inclusive growth”.

An IMF mission is in Argentina lead by Julie Kozack, deputy director for the Western Hemisphere Department and Luis Cubeddu head of the IMF mission for Argentina. That mission will be in Argentina until February 19 and is meeting with a broad array of officials in the economy ministry, central bank and other government agencies.

“In the context of this mission, the Fund staff team will be looking at and discussing with the authorities their debt sustainability analysis”

Top Comments

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  • Enrique Massot

    Whatever Rice may say now, the IMF did loan Argentina an all-time record amount, and gave former president Macri significant flexibility on the use of those dollars and the results are now there for all to see.

    It's important to remember that Macri sought IMF assistance early 2018, after private investors stop lending money to Argentina. Since Macri took office December 2015, he had been taking in large amounts of dollars from foreign, private investors lured by high interest rates and quick repay terms.

    If the massive borrowing in 2016 and 2017 had led Argentina to ask for assistance from a last-resort lender such as the IMF: could this organization have been more careful, especially taking into account previous history?

    That is why the current Argentina government, which is not benefiting from the humongous financing the previous administration did -- but instead has the task of paying for the party -- is talking about shared responsibilities.

    Feb 15th, 2020 - 04:21 pm 0
  • Guillote

    Kumpa EM

    cuando habla la multiprocesada de presos politicos ,persecucion de los medios hegemonicos que la atacan , que la justicia la ataca sin ningun fundamento. Y la tonteria del lawfare.todo ok
    Pero que lo diga desde cuba, naaaaa desde cuba , eso va para los kumpas

    Feb 16th, 2020 - 03:08 am 0
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