Thousands of people have rallied in Argentina’s capital, Buenos Aires, urging their government not to sign any kind of debt restructuring deal with the International Monetary Fund (IMF).
The protesters thronged Buenos Aires’s Plaza de Mayo on Saturday, carrying placards that read “No to a deal with the IMF” as colourful banners of the country’s largest social and left-wing organizations rippled under the beating sun and anti-IMF slogans roared on the loudspeakers.
“People might not be aware of a lot of things, but they are aware of the fact that the words ‘International Monetary Fund’ in this country … have always brought us more misery and more dependency,” said Carlos Aznarez of Organizaciones Libres del Pueblo, one of the groups that organised the rally.
“People understand that we are headed for disaster if we sign this agreement,” he said.
Argentina’s government is in the midst of negotiations with the IMF to restructure $44bn that it owes to the global fund.
The loan dates back to 2018, when then-president Mauricio Macri signed on to a $57bn agreement with the international lender of last resort, making it the largest loan in IMF history. Some $44bn was dispersed, but President Alberto Fernandez, who took office in 2020, has refused the rest, and set out to renegotiate repayment terms of the loan.
The current agreement calls for repayments of $19bn each in 2022 and 2023 — amounts that many say the government cannot afford to pay back amid a groaning recession that has seen inflation skyrocket and poverty continue to climb.
The social organizations on the street on Saturday say that paying off the debt will inevitably lead to austerity measures that will hurt ordinary Argentines.
They fear an increase in the cost of utilities, an increase in interest rates, a reduction in public works, cutbacks to state employees, pensions and social spending. These are measures that Argentines have seen before, some as recently as in 2018, when the government imposed an IMF-backed plan to slash public spending in order to pay off debt.
But it’s the role the IMF played leading up to and during the financial meltdown of 2001 that continues to enrage many Argentines. At the time, the government devalued its currency and banned bank withdrawals after defaulted on its $93bn debt, triggering widespread social unrest as unemployment and poverty skyrocketed.
Fernandez, who lost political support in last month’s mid-term legislative elections, has been talking tough, vowing that Argentina “will not go down on its knees” before the IMF, while at the same time promising to pay back what it owes.
A faction of his party, led by the powerful Vice President Cristina Fernandez de Kirchner, has opposed any cuts to public spending.
“You know, Alberto, that there is talk of external restriction, and that Argentina lacks dollars,” Fernandez de Kircher said on Friday, addressing the president at an event celebrating Democracy Day, which marked 38 years since the end of the last military dictatorship in Argentina.
“But there is no shortage of dollars; they were taken abroad to tax havens, by the billions. Make a commitment that every dollar that they took without paying taxes will come back. Make it a point of negotiation.”
The president responded by telling Fernandez de Kirchner to “remain calm, we are not going to sign anything that would endanger the growth of Argentina”.
On the same day, the IMF released a statement to mark the end of the latest round of talks in Washington, noting that while technical work had advanced, “further discussions are needed”.
“The teams agreed that broad support – both domestically in Argentina and within the international community – would also be critical to the overall success of the economic program,” the statement said.
But that will be hard to come by in Argentina, which has repeatedly defaulted on external debt and had to turn to the IMF for financial help.
“There is an overwhelming mistrust from a big part of society with respect to the IMF because there isn’t a collective sense that the IMF has actually helped Argentina,” Martin Kalos, an Argentine economist, told Al Jazeera.
“The influence of the IMF on the policies in Argentina has been very clear many times,” he said.
“From explicit programs designed and approved by the IMF to finance times of crisis, as occurred in 2001, to IMF and government officials pointing out that Argentina was the IMF’s best student.”
He said those policies “didn’t didn’t end up mitigating moments of crisis and in some cases, helped put us in crisis”.
However, not coming to an agreement with the IMF would “maintain a scenario of uncertainty” with respect to the availability of financing that Argentina needs now to be able to claw itself out of the financial crisis, said Kalos, director of the consultancy firm EP y CA Consultores.
The issue, he added, is that the IMF is not designed nor interested in dealing with the root causes of Argentina’s never-ending financial woes. Because the problem is not financing, but a structural issue in an economy that does not have enough sectors of high productivity, he said.
“Argentina needs to generate and promote new productive niches to generate another dynamic. So that they can trigger growth,” said Kalos.