If anyone expects the IMF’s “ExPost” assessment of the credit granted to Argentina in 2018 to be an exercise in self-flogging, they will surely be disappointed.
Maybe not the case of the president Alberto Fernandez and the Minister of Economy, Martin Guzman, to whom the Argentine representative in the board of the organism, Sergio Chodos, you have already reached the document, with your comments, but it could be that of Cristina Kirchner, who went so far as to say that with the loan to Argentina the IMF had violated its own statutes, a statement already rejected twice by the Fund’s communications director, Gerry Rice.
The president should not forget, moreover, that last March he himself brought forward to the Legislative Assembly the criminal complaint that was presented shortly after by the Anti-Corruption Office, in charge of Felix Crouss, a member of Legitimate Justice, representing the Executive, before the court of Maria Eugenia Capuchetti.
The evaluation – formally known as “ExPost Evaluation of Exceptional Access” (in long-distance slang, EPE) – should have been known a year ago
The cause, titled “Macri, Mauricio and others on fraud due to fraudulent administration and fraud against public administration ”, in addition to the former president, included Nicolás Dujovne, as Minister of Finance; Luis Caputo, as Minister of Finance and then President of the BCRA and also former heads of the Central Adolfo Sturzenegger y Guido Sandleris. The charges include breach of the duties of a public official, abuse of authority, embezzlement of public funds, fraud in the administration and even violation of the law of the public translator, for not having officially translated some documents related to the agreement into Spanish.
That complaint did not go down well with the IMF, described as a participant in a fraud. In fact, Fund officials suspected until recently that the “ex post evaluation” of the program was delayed due to pressure from the Argentine government itself, since the document probably rejects any hint in this regard.. In any case, it is an open question: being a technical document, it probably refrains from such considerations. Furthermore, there are allegations that it was a loan to “finance Macri’s campaign,” as Guzmán said publicly. And as other government spokesmen also pointed out, including the president, pointing to the role of Mauricio Claver, then US representative at the IMF and today head of the IDB.
The evaluation – formally known as “ExPost Evaluation of Exceptional Access ”(in long-distance slang, EPE) -, he must have met a year ago. Its “exceptionality” is relative: there were also SOEs for loans to Ukraine, Romania, Portugal, Greece and Iceland, among others. In the Icelandic case, furthermore, one of the officials involved was Julie Kozack, Deputy Director of the Western Hemisphere Department and current negotiator with Argentina. So no self-flagellation and mea culpa. Criticisms of this kind, in any case, can be expected from the “Independent Evaluation Office”, whose first task was precisely to evaluate the Fund’s task in Argentina between 1991 and 2001, that is, basically, the years of convertibility. .
What there may be is recognition of design errors and blunders – which are obvious – on the effects that the program would have, which did not achieve the country’s access to international private credit, as expected. As well as the debt restructuring that Guzmán closed with private creditors in August 2020, managed to reduce the country risk and get out of financial weakness, as evidenced by the almost 1,800 points of the Argentine EMBI and the meager reserves of the Central Bank.
The IMF explained that one of the objectives of the SOEs is to assess whether the initial justification for the credit was consistent with the measures applied, whether the macroeconomic strategy was correct, and whether the program met its objectives.
Probably, the Fund did make explicit that it was an error by the BCRA to open the Lebacs market, an instrument of monetary regulation, to individuals and investment funds. Own Alfonso Prat-Gay, Macri’s Prime Minister of Economy, recently underlined that mistake, which is also one of Guzmán’s frequent complaints.
A critical point may be whether the IMF suggested restructuring the debt with private creditors or introducing some light form of capital control, before the August 2019 STEP that precipitated the final disarray of the program. The then Minister Dujovne was against any suggestion in this regard.
Why and for what
In a 2010 document, the Fund explained that one of the objectives of the SOEs is to assess whether the initial justification for the credit was consistent with the measures applied, whether the macroeconomic strategy was correct, and whether the program met its objectives. In fact, as he pointed out several times Hector Torres, a former Argentine representative at the IMF, the program was a failure not because the government failed to meet its goals, but because none of its goals were achieved.
Two evaluations of the opposite mood may serve as a guide for the “EPE” in the Argentine case. On the one hand, the questions raised by the evaluation of the Greek case, and on the other certain statements about the program with Portugal, whose case the then candidate Alberto Fernández considered a successful model.
Should the adjustment have been more gradual? Should the program have been more flexible? Was such a big recession foreseeable? Were the structural reforms sufficient to restore competitiveness and growth? Such are some of the questions surrounding the painful Greek case.
Probably, the Fund did make explicit that it was an error by the BCRA to open the Lebacs market, an instrument of monetary regulation, to individuals and investment funds.
That of Portugal is also interesting, because it received aid of USD 33,000 million (two thirds from the IMF and one third from other countries of the European Union), which in relation to its GDP (as well as the aid to Greece from the “troika ”IMF, European Central Bank and Germany), was higher than that received (although only from the Fund) Argentina.
Like our country in 2018, Portugal suffered an abrupt cut in financing in 2011, simultaneously with the crisis in Ireland, Greece and Spain (it was fashionable to speak of PIGS, by the initials in English of those 4 countries), to which it responded with a severe adjustment and a very strong recession.
However, the 2016 EPE said, while the program achieved stability, Portugal still had relatively high public and private debt, bank “weaknesses,” double-digit unemployment, and a competitiveness “gap”.
Adjustments in the context of a monetary union, the Fund said then (due to Portugal’s membership of the euro area) are very difficult and take time, something that could also apply to a highly dollarized economy like Argentina.
Other lessons, the ex post evaluation of the Portuguese case concluded, was that the goals and projections of a program must be realistic (for example, on GDP growth), that it is better to recharge the effort at the beginning, to avoid fatigue if the The process takes a long time, and it is essential that the government really “owns” the program, so that it applies it with conviction.
This is a key to the current negotiation and it goes beyond legislative approval. Surely at the IMF they also read letters from Cristina Kirchner.