For Stiglitz, the new understanding between Argentina and the International Monetary Fund (IMF) “has avoided austerity.”
“Although it is still pending the approval of the Argentine Congress and the IMF board, it will allow the Argentine economy to grow while the Government continues with its actions aimed at reducing poverty and gradually lowering inflation,” the economist argued.
According to Stiglitz, “it is well known that the old model of austerity does not work”by ratifying his opposition to the adjustment plans usually promoted by the multilateral organization.
“It not only causes the economy to contract and inflicts undue suffering on the population, it also fails to meet even the very specific goals of reducing deficits and increasing a country’s ability to pay its creditors,” projection.
In addition, he argued that Argentina “has demonstrated the benefits of an alternative, growth-focused strategy.”
“When the economy is allowed to expand, tax revenues can rise rapidly,” I consider.
In relation to “some critical comments suggesting that there is something in the blood of Argentines that makes their country unreliable, as if it were a nation of bums,” he said, “couldn’t be further from the truth.”
“When the most recent center-right president, Mauricio Macri, took office in late 2015, Argentina’s external public debt was relatively small, at 35% of GDP, due to the growth and debt restructuring policies of previous governments. Then, Macri launched to ask for the loan. By 2019, Argentina’s external public debt had increased to 69% of GDP “he remarked.
He also recalled that the IMF granted its “larger loan” to the Government of Macri in 2018 “without even imposing conditions to prohibit the money from being used to finance capital outflows or pay unsustainable debts to private creditors.”
“What happened next is not surprising: capital flight, economic contraction and spiraling inflation, which reached 53.8% in 2019”highlighted
Regarding inflation of 50.9% in 2021 and the claim of some of a recessive program to control prices, he warned that “Even if renewed austerity achieved this goal, the cure would be worse than the disease.”
“In a country where 40% of the population already lives below the poverty line, no program that raises unemployment enough to rapidly reduce inflation would be sustainable or justifiable,” Indian.
Finally, he pointed out that Argentina’s new agreement with the IMF is “only the beginning” and stated that “there will always be those who yearn for the old IMF, with its contractionary, often harsh or procyclical conditionalities”.
“These policies would be a disaster for Argentina and the world. They would deepen the gap between advanced economies and developing and emerging market countries, further undermining the credibility of the IMF, which is tasked with ensuring global financial stability.” , at a time when measures are urgently needed to improve this stability,” concluded.
Source: Ambito
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