Argentina: IMF loan will cost 30 billion dollars in interest and surcharges

2023-04-18 04:17:16

The agreement signed by former President Mauricio Macri and later modified by the government of Alberto Fernández will cost the neighboring country the equivalent of 6% of the Gross Domestic Product (GDP).

So far, Argentina has paid 6,457 million dollars in interest and surcharges to the International Monetary Fund (IMF) for the debt it contracted of 50 billion dollars in 2018. 21.6% was paid during the Macri government and the 78.4% during the current administration, according to a report by the Latin American Strategic Center for Geopolitics (Celag) based on official data.

The report indicates that the payment of 3.3 billion dollars in 2023 is equivalent to almost a third of the primary deficit (2.4%) of 2022 and 0.7% of GDP. This sum triples the IMF’s annual operating expenses.

At the end of the agreement in 2023, if interest rates are maintained, Argentina will have paid 30 billion dollars in interest and surcharges since 2018, equivalent to 6% of GDP measured in dollars, only for financial costs of the two loans.

Self-criticism of the Fund and the “silver to win the election”

In December 2021, the IMF issued a report in which it admitted that the program agreed with Argentina “did not meet its objectives, despite significant changes in economic policies.” “Increased redemptions, coupled with capital flight from residents, put considerable pressure on the exchange rate. Despite the exchange rate interventions beyond the provisions of the program, the exchange rate continued to depreciate, increasing inflation and the value in pesos of the public debt, and weakening real income, especially of the poor,” the agency said in back then.

The former president of the Central Bank during the government of Mauricio Macri, Carlos Melconian said that at that time the Argentine president revealed to him that the loan had political purposes. “They are giving me money to win the election,” Macri told him, according to what Melconian recounted in November 2022 during an activity at the Center for Development Studies in Montevideo.

“It is absolutely true that President Macri achieved exceptional access from President Donald Trump,” said the former chief.