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Guzman Tells Argentine Congress, ‘Asphyxiating’ IMF Debt Is Unpayable; First We Have To Grow

Feb. 13, 2020 (EIRNS)—On the same day the International Monetary Fund arrived in Argentina to begin negotiations with the Alberto Fernández government on the $44 billion debt owed the Fund, Finance Minister Martin Guzman laid out in an address to Congress the stark reality of the country’s economic crisis and why payment to the IMF is impossible today. In order to begin growing and make payments by 2024, as the government is proposing, Argentina must get “out from under the debt burden that is asphyxiating us,” Guzman told gathered legislators, trade unionists, Church officials and others.

Guzman outlined an “anguished” situation, caused by four years of IMF policy imposed by former President Mauricio Macri. He presented shocking details of the growth of debt over just the past two years—from 52% to 88% of GDP—the dramatic drop in exports, the growth in poverty from 28.5% to 35.4%—“and still growing”—uncontrolled inflation, industry operating only at 60% of installed capacity, etc. He explained, the debt is “unsustainable,” and requires a “deep” restructuring. Our outlook is “not optimistic, but realistic.”

Because the government is engaged in negotiations, Guzman said he would not reveal details of its macroeconomic program, but affirmed that it is been carefully thought out. He emphasized that austerity is not possible in a situation of recession; nor is any reduction in the fiscal deficit in 2020. The IMF is responsible for the country’s debt and economic crisis, as are those Argentine leaders who allowed insane debt growth. The IMF loan to Argentina was the largest in the nation’s history, “which wasn’t used to increase the country’s productive capacity, but rather to pay debt and [abet] capital flight.” He also blamed bondholders who bet on the failed IMF model and charged huge interest rates to cover themselves.

Guzman warned those bondholders they will be “frustrated” when “difficult” restructuring talks, requiring a “haircut,” begin. “We’re not going to allow foreign investment funds to set the guidelines for our macroeconomic policy.”

The Finance Minister also echoed statements by Vice President Cristina Fernández de Kirchner last week, when she called for a “Never Again” policy to stop the constant cycles of indebtedness that have plagued Argentina for years. He said: “This is a process in which we all have to decide whose side we’re on. We’ve already said that we’re on the side of the [Argentine] people.... It’s time to turn the page, and lay the basis for there to be a ‘Never Again’ to the cycles of overindebtedness.”

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