Precarious agreement with the IMF?

Precarious agreement with the IMF

The agreement with the IMF has become a major factor in the national crisis. Guzmán’s revelation that the talks are bogged down added one more seasoning to the country’s already convulsed economic and political situation. The stone of contention would be the extent and pace of the adjustment. The IMF would be demanding that in 4 years Argentina have its accounts balanced while the government proposes that it be extended to 6. But a greater difference has to do with the magnitude of the fiscal deficit. The proposal made by the Minister of Economy is 3% of GDP while the financial institution claims 2.5%. The conflict is not half a point but the distance is greater, since the government’s proposal refers to the “primary deficit” prior to the payment of interest on the debt, while the Fund calculates the deficit including the payment of financial services. Taking this last yardstick, the deficit that Argentina proposes stretches to 4.9%, against almost half that is proclaimed from Washington.

These are not the only stinging points. The IMF claims to reduce the emission practically to zero in order to force the adjustment that they are fomenting when the official proposal reserves the appeal to that resource for several years. The authorities of the Fund are in favor of accelerating the pace of tariff hikes, along with a drastic reduction in subsidies and advancing in a maxi-devaluation, which will allow the exchange gap to be reduced by at least half, which today amounts to 100%.

In the midst of all the fuss in the conclave of governors that the word “adjustment” was eradicated in the discussions with the IMF, the fact that Guzmán stated that there was an approximation in the other points under discussion. The roadmap that the Argentine government admits incorporates a sustainable real exchange rate with an encouragement of exports, that is, a devaluation; an increase in taxes, although he tried to cover it up by pointing out that a more progressive system will be introduced. In the same way, he referred to positive interest rates, which is the solution promoted by international financial organizations to retain capital in the country and avoid a run on the dollar.

These winks from the Casa Rosada, however, have not been enough to convince big capital. We are facing a black week in the markets, where shares and bonds collapsed, the country risk exceeded the barrier of 1,800 points and the dollar continued its upward run.

The expectation that the saving hand of the United States would come has collapsed. According to the chronicles that the press collects, the government was surprised by the “hardening” that it is finding in Washington. The oven is not for buns. The Democratic government is in turmoil and is on a tightrope with a marked decline in its popularity and in the midst of a precarious economic recovery threatened by the new wave of Covid and a jump in inflation that is adding fuel to the fire of discontent. of the North American population, which has been suffering a severe impact on their pockets. The price index, at present, is the highest in the last 40 years. And what is coming is an increase in the interest rate and, therefore, an increase in the cost of the debt and greater pressure for its repayment on the emerging countries. A scenario, by the way, not auspicious for Argentina in the framework of the current negotiations with the Fund.

The government has urgently sent Foreign Minister Santiago Cafiero to meet with Secretary of State Anthony Blinken. The hope is that the political wing of the White House will intercede to remove the intransigence that the US Treasury Secretary, Janet Yellen, who has a determining weight in the IMF staff, is showing. Let us remember that, initially, the Argentine government had put its chips in this official by virtue of the academic and ideological “proximity” that the secretary and her husband, another renowned economist, maintained with the Nobel Prize winner Joseph Stiglitz, who is one of the gurus and intellectual guide of Martín Guzmán.

pact in progress

There is no shortcut possible. All roads lead to the IMF. Just a few days after the bravado in the meeting with governors, the news has come out, although it is trying to do it with the greatest secrecy, that the government would be trying to advance a “precarious agreement” with the IMF, in the words of officials. of the government “the agreement will be bad for the country and the people but the default would be even worse and it is not in anyone’s head”. And they add “in March there will be a loose agreement that will allow us to reach 2023” (The nation9/1).

In short, a new capitulation of the government is being prepared. There is no official plan B of not paying the debt, so that the government ends up a prisoner of IMF extortion and opens the way to eat a new toad. We have already seen this film on the occasion of the arrangement with the bondholders on a national scale and in the provinces, beginning with the agreement reached with the bondholders by Kicillof in the province of Buenos Aires. A new signal has just been given by the Casa Rosada which, despite the fact that the Central’s coffers are exhausted, triggered 670 million dollars to the bondholders for the payment of interest. It will be necessary to see what the IMF’s predisposition is for a “precarious agreement” and in case it prospers, what is the fine print, although what is clear is that it will mean, as the authorities themselves admit, a severe blow to the population and the country.

For an exit of the workers

The “bridge to 2023”, if it prospers, will not be a walk. The most “convincing” argument that Martín Guzmán intends to use to reach an agreement with the IMF is the fiscal savings that the government has already been carrying out in particular in 2021, that is, the opposite of what Alberto Fernández agitated at the meeting with the governors. Far from the adjustment being banished in the discussion with the Fund, it will be very present. The detailed report that has just been released by the Iaraf, an agency specialized in the matter, is relevant, giving an account of the magnitude of the adjustment and reduction of social items in the year that has just ended.

The report compares “the real public spending accumulated in the first eleven months of 2021 with that of the eleven of 2017, which marked the highest record in the last six years and has the advantage of leaving out the distortions of the pandemic.” The result sings “a very strong adjustment on enormous social layers and in more than one sense unprotected” (Clarion9/1).

Always 2021 versus 2017 and in constant pesos, “the falls count: 682,177 million, in retirement and pensions; 100,000 million for the Pami; 23,214 million in family allowances and 365,000 million in State salaries”. The sum of the parts yields a “fiscal saving” that exceeds one trillion pesos and is equivalent to around US$ 11,600 million. The real expenses of 2021 in pensions, in the Pami and in salaries are the lowest since 2016 (idem). The nac & pop have gone much further than the macristas.

In contrast, the Iaraf lists energy subsidies that in the same comparison amounted to an impressive $605,000 million. But the most serious thing is that energy expenditures in 2022 threaten to be even higher, despite the increase in rates projected by the government. Once again, the world crisis sticks its tail and plays tricks on the government, since energy prices have gone through the roof and Argentina will have to pay almost triple for liquefied gas, which has gone from 12 in 2021 to a whopping US$ 30. This proves even more that capitalist contradictions far exceed the government’s arbitration capacity. And a confession that, even putting into practice the new adjustment that is projected, it will not dispel the default scenario that is the inevitable outcome of a debt that is unpayable.

The capitalist exits in dance are unfeasible and put on the order of the day the need and urgency of an exit of the workers aimed at a comprehensive reorganization of the country on new social bases, whose starting point must be the cessation of payment of the debt usury, the nationalization of banking and foreign trade, put an end to capitalist looting and control of production workers in order to put national resources at the service of an industrialization plan, independent development and privilege popular needs.

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Precarious agreement with the IMF?