Mauricio Macri’s government has allocated 83 percent of funds received through its record credit-line from the International Monetary Fund (IMF) to paying off external debt acquired in the first three years of his administration, figures released this week show.
Argentina's record IMF loan of US$56.3 billion was the largest ever granted by the organisation, however the Cambiemos administration only received US$44.3 billion of that to date. In September, the multilateral lender was due to transfer the year’s remaining disbursement of around US$5.7 billion. The transaction was halted after President Macri's defeat in August's PASO primaries.
According to an official statement from the Treasury on Monday, only US$1.9 billion of the money sent to date remains available for the government to use.
In addition to the funds dedicated for paying off external debt, the government used about 14 percent of the funds to service payments on national debts and the remainder for primary expenditures in foreign currency, mostly fuel imports.
President-elect Alberto Fernández – who defeated Macri in the October 27 presidential election – has been an outspoken critic of the IMF deal. Speaking Tuesday, he said he would not draw down on the outstanding amount and seek instead to renegotiate terms with the lender and private bondholders.
Fernández has said that the IMF loan didn’t generate anticipated results and he warned that “the real economy hasn’t stopped contracting, nor has the health of our job market and businesses stopped worsening.”
He also said inflation isn’t on a "sustainable" track and that the impoverishment of the public hasn’t stopped growing.
The president-elect has expressed concern over the fact that the ‘credits given by the IMF to our government have been used, in large part, to finance the exit of capital.”
“The final payment has been fully destined to finance the leakage. The phenomenon constitutes a flagrant failure of what’s required by Article VI of the Constituent Memorandum of the IMF,” Fernández said in a statement.
Last week, the president-elect had his first telephone conversation with the new IMF managing, Bulgarian economist Kristalina Georgieva. She has warned that Argentina's new economic plan must have “fiscal viability.”
For his part, Fernández said he was willing to renegotiate the debt but that it would invariably include more adjustments in the overall economy.
“I understand the relevance of fiscal viability, you don’t have to convince me of that. But it is my obligation to anticipate that in the situation that the Argentine economy faces that it’s difficult to promote greater alignment,” he said, according to reports.
“We can’t make more fiscal adjustments because the situation is incredibly complex, and the level of adjustments during the Macri era has been tremendous.”