Argentina and the IMF
Last week, the International Monetary Fund and Argentina's government agreed to another loan package of $8 billion and further austerity programs. The Institute for Policy Studies asked the following policy critics to weigh in on the decision.
BEVERLY KEENE is the coordinator of Dialogue 2000, a coalition representing human rights and other groups in Argentina.
Keene said: "This new agreement with the IMF brings no resolution to growing unemployment and poverty. In fact, it will only make things worse since these loans are conditional on implementing more of the policies that have impaired the economy and taken an enormous human toll due to the cuts in health and social services ... Argentina will pay some $30 billion in interest and foreign debt service this year, more than half the national budget and many times over what it will spend on education and healthcare. This debt itself is fundamentally illegitimate, in part because it largely originated in loans taken out by a military junta responsible for the torture and disappearance of more than 30,000 Argentinians during the so-called 'dirty war' during the 1970s and '80s. The governments, bankers and corporations of the rich north are continuing to oppress us by forcing us to pay them back for their loaning money to the murderous junta."
MARK WEISBROT is co-director of the Center for Economic and Policy Research, a Washington D.C.-based think tank.
Weisbrot said today: "Argentina has borrowed more than $40 billion at high interest rates to defend its overvalued currency. That would be the equivalent of our government borrowing $1.4 trillion -- 70 percent of our federal budget -- to defend our own overvalued dollar. For 20 years now, Latin America has followed Washington's advice and slashed tariffs, swallowed IMF austerity plans and sold off tens of billions of dollars of state assets to foreigners. This has brought a lot of pain, but no gain. Over the last 20 years, income per person in Latin America grew by a mere 7 percent, compared to 75 percent for the two decades before that (1960-1980), when governments exercised more control over their economic policies."
GREG PALAST is an economist and author of "Democratic Regulation." Palast writes the column "Inside Corporate America" for Britain's Guardian newspapers.
He said: "Last September, while Argentina was already on the cliff-edge of a deep recession, the IMF required Argentina to cut the budget deficit from $5.3 billion to $4.1 billion and asked for 'a 12-15 percent cut in salaries' of civil servants. The economists at the IMF surely know that holding back government spending and snuffing out purchasing power in a contracting economy would be like turning off the engines on an airplane in stall. The payoff for these delusional and cruel policies was a $26 billion emergency loan package. However, the IMF also forced Argentina to 'peg' its currency to the dollar, which meant that Argentina was at the mercy of banks and speculators and ended up paying a whopping 16 percent risk premium above normal in return for the dollars needed for this scheme. Argentina's people don't net one penny. Little of the bailout money escapes New York, where it lingers to pay interest to U.S. creditors, like Citibank. What's more, the peg causes the peso to remain overvalued, making it very hard for Argentina to export its way out of recession. This disaster was created by IMF policies which transformed a mild recession into a depression and international crisis."