[R-P] Fw: [stop-imf] IMF Playing With Fire in Argentina

[Julio Fernández Baraibar]

Esto ha sido producido por una ONG norteamericana llamada "Paren al FMI"
(Stop IMF)
Trata el caso argentino, y aquellos que puedan leer inglés van a
encontrar cosas de sumo interés.
Fijense especialmente los párrafos en los que se refiere a la capacidad
de recuperación de Argentina, si no se pagan los vencimiento de la deuda
externa.

Julio Fernández Baraibar

> For more information on this subject, see CEPR's Briefing
> Paper, "What Happened to Argentina?", at www.cepr.net
>
> This was distributed to newspapers by Knight-Ridder/Tribune
> Information Services. If anyone wants to reprint it, please let me
> know.
>
> IMF Playing With Fire in Argentina
>
> BUENOS AIRES -- "It's an explosive mix," said
> Ruben Cortina, a professor of law and economics at the
> University of Buenos Aires. "The middle classes are
> angry because their savings have been partly
> expropriated. The unemployed, at 22 percent and
> growing, have gotten nothing. And even those with jobs
> have had falling wages, and now face the prospect of
> even lower living standards due to inflation."
>
> The mix already exploded less than two months
> ago, when tens of thousands of people poured into the
> streets to defy then President Fernando de la Rua's
> declaration of a "state of siege." It was a collapse of state
> power -- a rare event that in other countries might have
> resulted in what is commonly called a revolution.
>
> Calm has returned to this sprawling city of 9
> million, with its wide boulevards and European
> architecture carrying reminders of the country's relatively
> prosperous past. But unless the new government of
> President Eduardo Duhalde can reverse Argentina's
> accelerating economic decline, the peace may not last
> long.
>
> Can this be done? Contrary to the theme of most
> business reporting and forecasts, Argentina could recover
> relatively quickly without suffering further economic
> contraction. The country is actually running a surplus in
> both its trade and government accounts -- if we don't
> count interest payments. In other words, Argentina
> doesn't really need foreign aid so much as it needs a
> moratorium on its debt service payments.
>
> In fact, the story of Argentina's debt is really the
> story of its current economic crisis. And if we look at the
> numbers, it is decisively not a case of a government
> trying to live beyond its means. From 1993 to 2000,
> government spending as a share of the economy -- again,
> excluding interest payments -- was basically unchanged.
>
> So what happened? Most importantly, Argentina's
> interest payments increased. The trouble started in
> February of 1994, when the US Federal Reserve began a
> series of rate hikes that doubled US interest rates, from 3
> to 6 percent. Since Argentina's peso was fixed to the
> dollar, the shock hit especially hard. Investors began to
> fear that the country's higher interest payments would
> lead to devaluation and default.
>
> These fears multiplied, and capital fled the
> country, when Mexico devalued the peso in December of
> 1994. This caused a recession in Argentina. The economy
> recovered in 1996, but not for long: then came the Asian
> economic crisis (August 1997). Global financial markets
> spread the contagion to Russia and then Brazil. When
> Brazil's currency collapsed in 1998, Argentina's fate was
> sealed. The economy has been in recession -- which is
> now really a depression -- for nearly four years. In
> December, the inevitable currency devaluation and
> default on government debt finally happened.
>
> In other words, Argentina fell victim to the
> caprices of the global economy, as well as some bad
> policies -- most deadly was the fixed exchange rate that
> tied the peso to the dollar. These policies were supported
> and sponsored by the International Monetary Fund. All
> this would be just interesting history, if not for the fact
> that the IMF is at this very moment trying to force further
> budget cuts on Argentina's government.
>
> The Fund is still acting as though government
> spending is the problem. But the budget cuts will most
> likely worsen the depression: economists here are
> projecting another 8 percent drop in GDP for 2001, or
> worse.
>
> It doesn't have to happen this way. The
> government of President Duhalde proposed a reasonable
> economic recovery program when he took office: one that
> would have made the banks absorb much of the cost of
> the devaluation, tax the oil companies (who will reap a
> windfall from the devaluation), revive domestic industry,
> and suspend interest payments on the foreign debt.
>
> But the IMF is a debt collector, and it insisting on
> more austerity and pain. Other governments -- most
> notably that of Malaysia during the Asian economic crisis
> -- have stood up to the IMF, and done better for it. But
> Duhalde's government has little backing among
> Argentines -- he was chosen by the Congress, not a
> popular vote. And people here are deeply cynical about
> their politicians and government.
>
> So the Fund's officials have the upper hand. But
> they better be careful about how much debt service they
> try to squeeze out of this collapsed economy, and how
> many more people they push into poverty. They are
> playing with fire this time.
>
> Mark Weisbrot is co-director of the Center for
> Economic and Policy Research (www.cepr.net), in
> Washington, DC.
>
> Name: Mark Weisbrot
> E-mail: <weisbrot en cepr.net>
> Co-Director
> Center for Economic and Policy Research
> 1015 18th Street NW, Suite 200
> Washington, DC 20036
> Phone (202) 293-5380 x228
> Fax (202) 822-1199
> (202) 333-6141 (home)
> (202) 746-7264 (cell)
> www.cepr.net
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