[stop-imf] Re: Argentinean Government Rejects New IMF Demands]

[Robert Weissman]

From: =09Alan Cibils <cibilsalan@yahoo.com.ar>









Hi Robert,

While the statements below are, of course, true, it is important to put
them into context. The government rejects making a higher primary fiscal
surplus explicit in a future agreement with the Fund, however, de facto
primary surpluses are quite a bit higher than even what the IMF is asking
for. Last year, consolidated (national and provincial) primary surplus was
about 5.5%, and it is estimated that for this year it will be close to 5%.
Furthermore, on the privatized utility rate issue, while the government
rejects IMF pressures, it is de facto signing agreements with many of the
utilities (e.g. electric, gas) to allow substantial rate hikes (20-30% over
the next year). And so on.

In other words, the government is doing most of what the IMF wants, but
won't admit it. Why? Because this year is an election year (October) and
Kirchner has stated publicly (and often) that these elections are going to
be a plebiscite on his rule so far. Appearing to bow to IMF pressure makes
him look bad, so he will confront the IMF with his rhetoric, while doing
most of what the IMF wants.

The IMF, on the other hand, should be mostly interested in keeping the
status quo: no agreement with Argentina, and let Argentina pay off its debt
to the Fund, on shcedule and in full, as it is currently doing. In other
words, make impossible demands in order to get rid of Argentina as soon as
possible. It is true that this also shows the IMF's weakness: it would be
better for the Fund politically to appear to be telling Argentina what to
do. However, the IMF has been so badly bruised with Argentina, that I would
not be surprised if their preference is to to cash in and be done.

All best,

Alan

*Alan Cibils*,
Senior Research Associate
Center for Economic and Policy Research
www.cepr.net

At 6/28/2005, you wrote:
>http://www.plenglish.com/article.asp?ID=3D%7BE560815B-8F80-4272-979E-59E71=
9BF6DCC%7D&language=3DEN
>
>Argentinean Government Rejects New IMF Demands
>
>Buenos Aires, Jun 27 (Prensa Latina) Argentina has rejected the
>International Monetary Fund (IMF) new conditions to renew their
>suspended agreement, local media sources report Monday.
>
>The head of the cabinet, Alberto Fern=E1ndez, categorically denied the
>possibility that Argentina increases its Gross Domestic Product (GDP)
>fiscal saving to 4.5 percent, as the financial entity would have been
>claiming.
>
>"It is not reasonable to increase our fiscal surplus to pay more debt,"
>underlined Fernandez in his first official response to an IMF document
>evaluating the Argentinean economy.
>
>The close aid to President N=E9stor Kirchner asserted that Buenos Aires
>needs a more mature relationship with financial institutions, chiefly
>the IMF, to allow Argentina to develop without postponing multiple needs.
>
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