Argentina 20 Years On: Has the IMF Really Changed Its Ways?

By Gino Brunswijck, Maria Jose Romero and Bodo Ellmers of The European Network on Debt and Development (Eurodad). Originally published at TripleCrisis

Argentinians are experiencing deja-vu this month as the government announces massive layoffs and a hiring freeze as part of an adjustment package attached to a loan from the International Monetary Fund (IMF). Thousands of public servants are being forced yet again to swallow the bitter pill of austerity, which the IMF programme– published last Friday – aims to patch up through increased targeted social assistance.

For many Argentinians the financial crisis gripping the country, and the return to the Fund, brings back bad memories of 2001. Then, IMF-induced policies triggered the worst economic meltdown in Argentinian history.  A cocktail of austerity measures contributed to the contraction of economic activity with a loss of 20 % of GDP between 1998 and 2002. They also compromised the government’s ability to provide essential services; unemployment soared above 20 % while real wages dropped by 18%; and poverty affected more than half of all Argentinians. Children were most affected, with seven out of 10 falling below the poverty line.

To appease popular discontent, the government and IMF officials have emphasised that this time the Fund has changed its ways. However, a comparison between previous and current agreements points to business as usual, focusing on traditional austerity with a few cosmetic tweaks.

Current Financial Outlook

Argentina’s financial outlook looks gloomy as global financial conditions change. Tightened monetary policies in advanced economies, just as foreign investors discard Argentinian assets, are putting downward pressure on the peso.

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