The IMF no longer believes that Argentina can escape the crisis on its own: Argentina’s debt burden is unsustainable, it is now said. It takes a "significant contribution from the creditors".
Argentina’s debt burden is no longer sustainable, and the creditors will have to forego some of their money. This is no longer just the attitude of the new left government in Buenos Aires, but also the assessment of the International Monetary Fund (IMF).
Peso has lost 40 percent of its value
A team of experts from the IMF had taken a closer look at Argentina’s situation and confirmed that everything is now boiling down to a haircut. Half a year ago the IMF experts were of a completely different opinion – but in the meantime the peso has lost almost 40 percent of its value against the dollar, the economy has contracted more than expected and the currency reserves have declined by 20 billion dollars.
IMF: Country needs fundamental rescheduling
The government has now imposed exchange controls and increased taxes in favor of emergency relief programs for the poor. The IMF expressly welcomes both. But it is neither economically nor politically feasible to have a budget surplus in this situation. And that’s what the country needs to service its debts. Because Argentina has long since received no more money on the capital markets. Therefore the country needs a fundamental rescheduling. And that also means a "significant contribution from the creditors," says the IMF communication. In plain English, this means: you will have to forego some of your claims.
Unexpected support for Fernandez
With this, the government of President Alberto Fernandez receives unexpected support. For weeks she has been trying to put pressure on the creditors to accept a haircut – so far with little success. She also criticizes the monetary fund itself: it gave Argentina’s ex-president Macri the largest loan in its history, although the risks were clear from the start.