Senators from the ruling Frente de Todos coalition dramatically intervened into attempts to renegotiate Argentina’s multi-billion-dollar debt with the International Monetary Fund this weekend, firing off a scathing letter to the multilateral lender laced with criticism.
In a missive addressed to IMF Managing Director Kristalina Georgieva, senators from the Peronist bloc in the upper house called on the organisation to “refrain from conditioning economic policy” during talks with the government.
They also demanded answers over what it alleged were irregularities in the 2018 decision to grant a record US$57-billion credit-line to Argentina, which was then led by Mauricio Macri. The senators implied that the Fund had been used as a political tool to support the former president’s bid for re-election.
"It is necessary to understand what went wrong at the time of managing the funds that that body so irresponsibly lent to Argentina," the lawmakers wrote in the letter, which was released to the press on Sunday.
The senatorial intervention arrives with government officials in the middle of talks with the IMF over how to restructure upcoming repayments on the debt the country still owes. A total of US$44 billion was loaned to Argentina under the original deal, with President Alberto Fernández rejecting the delivery of its final tranches upon taking office in December 2019.
New financing programme
The government is seeking to secure a new financing programme with the Fund that rips up previous commitments and replaces them with new ones. Last week, Economy Minister Martín Guzmán confirmed that the government would request an Extended Fund Facility programme, or EFF.
Such a scheme would give the country at least a four-and-a-half year grace period to start paying its debt back once the programme is approved, said the minister. However, an EFF typically requires countries to make deep, structural economic changes, according to the IMF’s guidelines.
The potential implications of such a move worries many Peronist lawmakers, many of whom see the IMF as in large part responsible for much of the economic turmoil that has gripped Argentina in recent decades.
This latest intervention is proof of the tensions that exist in Argentina when it comes to the IMF. Guzmán has said that any future deal should be put to lawmakers in both the lower and upper house, to ensure it carries legitimacy and is accepted by the entire political class.
Speaking at an event on Monday, President Fernández was supportive of the letter, saying that “indebtedness has done enormous damage to Argentina’s economy.”
"The senators have made very clear what happened to Argentina with care and a level of detail that allows us to see what I told the Fund in the campaign: I reminded them how they had violated their statutes to finance financial speculation and exit of capital," he declared.
"The most humble will not pay for austerity this time, those who speculated will pay for austerity, creditors will pay for austerity."
‘Long and unsuccessful’
Signatories to the letter were unapologetic about the outburst, with a number of figures seen as close to Vice-President Cristina Fernández de Kirchner – who heads the Senate in her role as veep – granting interviews over the weekend to further air their allegations. Fernández de Kirchner was not one of the signatories.
"It is important that the IMF authorities know what the majority thinking of the Senate is," said Oscar Parrilli, a senator for Neuquén who served as head of the AFI intelligence services during the former president's second term in office.
"The Executive prepared a bill that proposes that the agreement with the Fund be approved by law and that is why it is important that they know what our thinking is, and that later they are not surprised by what we propose," he told local daily Pagina/12.
In the letter, broken down into 31 points, the senators highlight the IMF’s "long and unsuccessful" history with Argentina, list their grievances and pose a number of queries they want answered.
"The social deterioration associated with the application of IMF programmes throughout Argentina's history has always been very high, with an increase in poverty, indigence and unemployment," it reads.
At one point, the senators accuse the IMF of breaking its own statutes, citing a statute which prevents the organisation from “using the Fund's resources to face a considerable or continuous capital outflow."
Frente de Todos lawmakers have continually accused the Macri administration of following policies that enabled mass capital flight from Argentina.
"They did not comply with their statutes and the previous government did not respect the laws either. In both cases they did not comply with the rules. Self-criticism does not have to be just a 'I was wrong,' – it has to be reflected in concrete measures from the economic point of view," Parrilli argued in his interview.
"We want to know why they allowed [capital flight]. They know where that money went, and if they do not know, it would be good for them to find out, because in Argentina that money is not there," he said accusingly.
"The IMF is in contact with all the countries in the world, even those that have tax havens, and they have tools that we do not have to investigate. They could help us to know where the money is," he maintained.
"The letter intends to reflect on how capital flight policies end up leading us to where we are today," said Anabel Fernández Sagasti, a senator since 2015 and co-founder of La Cámpora.
Mariano Recalde, a senator representing Buenos Aires City, justified the intervention by saying that the “future of Argentines” was at stake in the negotiations.
"What we want and need is for [the debt] to be renegotiated in the best possible way to be able to move forward without having to, as happened in other times, accept harmful conditions for Argentines," he said, referring to the potential introduction of austerity measures as part of any future financing programme agreed with the Fund.
Finally, the senators asked the IMF to respond to speculation suggesting that the mega-credit-line agreed in 2018 – the largest ever awarded by the Fund – was granted as a favour to support Macri's bid for re-election.
"It would be necessary for the Fund to confirm or deny these assessments, since we would be facing a very serious antecedent of influence and interference from the IMF for a certain political sector to obtain victory in the elections," they charged.
An IMF spokesman declined to comment on the letter or Fernández's comments. Earlier this year, when asked if the IMF had violated any of its own statutes in its programme with Macri, Fund chief spokesman Gerry Rice said: "there was no violation of IMF rules."