The IMF and the Argentinian Right

David Legge Avatar

C. P. Chandrasekhar, January 25, 2024

On January 10, the IMF announced its decision to release $4.7 billion out of a $57 billion bailout package sanctioned in 2018 to perennially debt-distressed Argentina, then under a right-wing government headed by Mauricio Macrio. That surprised some. Going by the IMF’s stated ‘principles’, the disbursal should not have occurred because the country had failed to meet the conditions and targets specified by the lender for continuation of the programme. Besides, the $4.7 billion reflected not only the delayed release of a $3.3 billion tranche that was due last November, but also the release in advance, or ahead of schedule, of an additional $1.4 billion. That was, from an IMF perspective, a handsome payoff for a delinquent.

Two factors seem to have played a role here. The first was the IMF’s intent, influenced no doubt by the US, to strengthen the hands of the new president of Argentina, the maverick, self-proclaimed anarcho-capitalist, Javier Milei. The extreme-right president had in recently held elections defeated the candidate of the left-of-centre Peronists who had governed Argentina during a prolonged crisis with three-digit hyperinflation. Milei, who, as of now, has held back on his election promises of dollarizing the economy and abolishing the central bank, has not disappointed domestic elites, international finance and the US. In late December, days after taking over the presidency, he devalued the peso by 54 per cent and issued a decree incorporating 300-odd measures involving wide ranging economic deregulation and liberalisation, rendering major public enterprises eligible for privatisation, dismantling worker protection, and imposing austerity in many areas. The decree remains in place unless voted out by both houses of Congress. The objective clearly is to use presidential power to pursue at the expensive of ordinary citizens a misguided effort to reduce in record time the deficit in the government’s budget and the size of its external debt.

A week later, Milei sent a 664-clause bill to Congress, that provides tax amnesties and concessions to the rich in an unequal society, does away with election to Congress based on proportional representation, penalises protestors blocking roads, and strengthens the government’s powers to curb demonstrations. The political and class character of the “adjustment” programme is amply clear. Tactically, the intention seems to be to heap so many right-wing “reform” proposals on Congress, where Milei is in a minority, so that he can push through some of them while riding on the partial legitimacy that the electoral verdict has given him.

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