According to a recent joint work of Fiscal Work Space for Equity (ETFE), Environment and Natural Resources Foundation (Farn) and Recursefrom a technical perspective, The central concern revolves around the systematic breach of the current regulatory framework.
Within that framework, they ensure that despite a strong fiscal adjustment and the decrease in monetary issuance, exchange and inflationary risks persist, with international reserves in historical minimums and a growingly conflictive social environment.
The document accessed scope indicated that the Executive Bran Strengthening of public debt sustainability as article 75 of the National Constitution. “This procedure implies not only a lack of transparency, but also a serious weakening of the democratic process in making structural financial decisions,” they said.
IMF: Institutional deficit and power concentration
In this sense, they warned that institutional deterioration is reflected in the indefinite extension of the 2023 national budget, used for the third consecutive year without debate or legislative approval. “This maneuver gives the Executive an extraordinary capacity to assign resources without formal controls, which seriously affects fiscal transparency”they stressed.
In addition, they stressed that the concentration of powers in economic, energy and administrative matters by decree reinforces a unilateral management dynamic that violates the separation of powers.
The designation by decree of members of the Supreme Court, the repression of peaceful demonstrations and the public statements of the Minister of Economy – who justified to avoid Congress for political reasons – illustrate an environment of degraded institutionality. These conditions directly affect one of the four pillars that the IMF demands to apply its exceptional access policy: the “institutional and political capacity” of the country to implement the agreed program.
Sustainability of debt and macroeconomic effects
The current agreement is negotiated in a scenario where payments between 2027 and 2032, including commitments with multilateral bonds and organisms, exceed 20,000 million dollars annually. This figure is equivalent to more than 25% of the total exported by Argentina in 2024, which questions the financial sustainability of the proposed scheme. In addition, the reserves of the Central Bank are not only low, but there are no guarantees of fiscal support to face the commitments assumed, according to the procurement of the Treasury of the Nation.
On the other hand, the Incentive regime for large investments (Rigi)designed to attract dollars, grants tax, customs and exchange exemptions on a large scale without evidence of effectiveness: in 2024, foreign direct investment was the lowest in two decades. “This type of deregulation was already applied in the 90s with negative results in terms of balance of payments and a wave of international litigation for more than 27,000 million dollars, many still active“They recalled.
Previous IMF evaluations and structural failures
IMF’s ex post reports on the 2018 and 2022 agreements recognize serious errors in their projections, including an underestimation of the contractive impact of fiscal adjustment on growth and lack of controls before capital escape.
Despite this background, the new agreement repeats similar patterns, without incorporating structural safeguards that guarantee medium -term viability or democratic control mechanisms, they stressed from the three entities.
“The lack of evaluation of the distributive impact of the proposed economic policies and the absence of monitoring mechanisms on human rights or climatic commitments also violate international standards. Thus underlines organisms such as the Inter -American Commission on Human Rights and the UN High Commissioner, who expressed concern about the deterioration of civil and social rights in Argentina,” they concluded.
Recommendations before signing the new agreement with the IMF
In a context where the National Government is again negotiating an agreement with the IMF without clear evidence of compliance with the four conditions for the exceptional access policies of the Fund (the sustainability of this debt as the political and institutional capacity to carry out the program that is agreed), Etfe, Farn and Recourse recommends the IMF staff and directory that:
- Adopt an internal policy to ensure compliance with national regulations When negotiating agreements with countries, and drives governments to carry out transparent discussions with interested actors (including civil society);
- Carry out a debt sustainability analysis that ensures that the agreed economic plan allows Argentina to fulfill its international obligations on human rights and climatic policy, in addition to an exercise of the distributive impact of policies (including indicators that allow monitoring);
- A review of IMF policies towards civil societyespecially in a context where the decision -making instances established by the Constitution and the laws are illegally.
Source: Ambito
