Monday, February 26, 2024

ECONOMY | 04-10-2021 16:11

Argentina’s government watches Georgieva's IMF troubles with concern

US lawmakers and officials are seeking to speed up an investigation into the director of the International Monetary Fund, for allegedly favouring China when she worked at the World Bank.

In the United States, moves are being made by lawmakers who want to speed up an investigation into Kristalina Georgieva, the head of the International Monetary Fund, for allegedly granting "favours" granted to China while she was an official at the World Bank. The situation looks set to heat up even more in the coming weeks. 

This turn of events has generated considerable surprise and concern inside Argentina's government, particularly within the Economy Ministry headed by Martín Guzmán, who was appointed to the position with the recommendation of Joseph Stiglitz, a Nobel Prize winner in Economics, and Georgieva herself.

According to reports, several US lawmakers are seeking to speed up the probe against the head of the International Monetary Fund, who has been accused of favouring China in a business ranking conducted by the World Bank when she was the institution's chief economist.

The news is a "bucket of cold water" for the government, which is facing its own internal problems following the outcome of the primaries. Officials remain optimistic about the possibility of reaching an agreement with the organisation in the short term. This is crucial for Argentina, which owes the IMF some US$45 billion from the record credit-line taken out by the previous government in 2018.

"As far as we know, Georgieva has a situation that is not easy to deal with," a Government House source admitted to Perfil.

According to information circulating within the Casa Rosada, US lawmakers and officials want a concrete measure to be taken with respect to the IMF chief while the investigation is ongoing. In principle, that measure would be a possible suspension from her post, which would mean that she would remain on the sidelines until the situation is finally clarified.

The issue is beginning to turn into a possible "scandal" for the multilateral lender, which begins its annual assembly next week, running October 11 to 17 in Washington, dates it shares with the World Bank.

According to government officials, they believe that if any action is to be taken regarding Georgieva, it would likely take place after the Assembly. Nevertheless, it is bad news for Guzmán and his economic team. Within that group, they accept that the United States carries strong weight within the Fund.

For Guzmán in particular, this new reality comes at the worst possible moment. The minister has come in for strong criticism over the last few months from hardline Kirchnerite leaders. To date, he has been able to hold on because of the support given to him by President Alberto Fernández. Guzmán "holds the keys'' to an agreement with the IMF.

Those keys, precisely, are the backing Guzmán has received from Stiglitz, from Georgieva, and the channel of dialogue with Janet Yellen, the US Treasury Secretary.

But in a few days, the panorama has changed drastically, unfortunately for Argentina.

Stiglitz recently warned in a newspaper article about an alleged coup d'état at the IMF, while Yellen decided to cut off dialogue with the organisation's managing director.

To make matters worse, the hard-line sectors of the ruling coalition have already told Guzmán that "there will be important changes" in the budget for next year, which complicates the head of the economic portfolio's room for manoeuvre even more when it comes to deepening talks with IMF officials, in order to reach an agreement.

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Fernando Nolé

Fernando Nolé


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