In the Streets of Buenos Aires: Protests Against the IMF

Protestors in the Argentine Capital of Buenos Aires carry signs that say “No to Payment of Paying the Foreign Debt, Out with the IMF.” Source: Ruptly TV

Thousands of Argentinians have taken to the streets of Buenos Aires to protest a new deal with the International Monetary Fund (IMF). The deal is meant to help Argentina repay roughly $45 billion in IMF loans by deferring debt payments dates in exchange for Argentina’s agreement to meet IMF-specified economic targets, specifically reducing their fiscal deficit and limiting spending. Protestors of the deal argue that the IMF is using its monetary resources to control Argentina’s government and ultimately forcing Argentina to spend its money paying foreigners instead of helping its people. The IMF has a controversial history of using loans and financial incentives to control sovereign nations’ monetary policies, and Argentina wants to avoid being the next victim.

Argentina possesses a relatively robust economy, with rich natural resources and a diversified industrial base. They currently have the third-largest economy in Latin America, behind Brazil and Mexico. Economic analysts also indicate that Argentina has potential for future economic growth in renewable energy, automobiles, and textiles. Despite this, Argentina has been historically plagued by debt problems and international financial obligations. Since the onset of Peronism after World War II, Argentina has traditionally used expansionary fiscal and monetary policies to fuel economic growth. These policies led to incredibly high inflation rates, the fifth-highest globally, and significant national debt. Due to these issues, Argentina has defaulted on its sovereign debt nine times, including a 2001 default on $93 billion, which saw Argentina locked out of international debt markets for over a decade. Argentina regained access to those markets during the presidency of Mauricio Macri. However, the election of Alberto Fernandez in 2020 has brought an increase in social spending and a more significant government role in the economy, as well as another Argentine debt default in May 2020. This has affected foreign investment in Argentina, which dropped 38% in 2020 due to heightened capital and price controls. These issues have fueled Argentina’s debt issues, as the national debt has increased to $336 billion, roughly 90% of Argentina’s GDP.

The IMF deal aimed to relieve these debt burdens and was initially accepted by the more conservative, pro-market President Marci. During his presidency, Marci enacted a series of controversial austerity reforms to limit government spending to relieve the debt burden. His administration was responsible for accepting the current IMF loans that are the subject of these protests. While Marci’s reforms were moderately successful, cutting social spending was unpopular with poorer Argentinians. Alberto Fernandez campaigned on undoing Marci’s economic reforms. His election in 2020 brought hope to many poor Argentinians that previous social spending programs would be restored. However, Fernandez’s government is still locked into Macri's international agreements, thus leaving Argentina on the hook for the IMF loans. Opponents of the loans prefer that Argentina do not pay them back and instead focus on restoring social spending; protestors carried signs saying “no to paying back the IMF.” Juan Carlos Giordano, a leading protestor, said, "the aim is to defend wages, defend work so that the money goes to combat social ills.” 

Despite the widespread protests, the Argentinian government is obligated to fulfill the terms of the deal and has continued negotiations with the IMF. In an address to the nation, President Fernandez stated, "We had an unpayable debt, which left us without a present and a future. Now we have a reasonable agreement that will allow us to grow and meet our obligations through growth." President Fernandez’s assessment is correct. Argentina possesses valuable economic resources and a strong potential for growth. Still, its debt problems have plagued Argentina for decades, causing the Argentinian economy to float through intense boom and bust economic periods, as inflation has prevented financial stability. The state of the economy has caused significant wealth inequality and poverty; four in ten Argentinians live below the poverty line. The IMF reforms may cause some reduction in social spending, though President Fernandez claimed: “the agreement would not limit Argentina's economic plans or spending.” However, these reforms give Argentina a legitimate chance at reducing their sovereign debt, which will allow them to control inflation and improve their debt and credit status with international financial organizations with the IMF. Overall, while Argentinians should maintain a strong negotiating front with the IMF to limit international interference in their government, a new debt payment deal gives the country a chance at establishing economic stability.