Lula says IMF is choking Argentina’s economy with debt

Brazil’s President Luiz Inácio Lula da Silva said the International Monetary Fund is asphyxiating Argentina’s economy as it faces one of the world’s highest inflation rates and struggles to comply with its US$44-billion programme. 

Lula’s comments were made Thursday during the swearing-in ceremony of Dilma Rousseff as president of the BRICS’s New Development Bank in Shanghai. The leftist leader, who’s in China for a state visit, said banks have to be tolerant and not asphyxiate indebted countries. 

“A bank shouldn’t choke national economies, like the International Monetary Fund is doing in Argentina,” said Lula, who emphasised he’ll push for changes at the IMF and the United Nations. “No ruler can work with a knife on his throat because he is in debt.”

An IMF spokesperson didn’t immediately respond to a request for comment. 

South America’s second-largest economy is facing annual inflation over 100 percent, exacerbating pressure on an economy that’s expected to fall into recession ahead of presidential elections in October. Last month, the IMF’s executive board approved a US$5.4-billion disbursement to Argentina, representing a key step forward in the programme that’s facing heightened risks amid the worsening economic outlook. 

The deal is Argentina’s 22nd IMF programme in its crisis-prone history. Amid a currency crisis in 2018, Argentina’s former government secured a record IMF bailout, but it failed to stabilise the economy. President Alberto Fernández negotiated a new deal in 2022 after two years of talks, but IMF officials recently said that “policy setbacks” are hindering the programmw.