Argentina The IMF has no good options—but it may have just selected the worst
August 23rd the government persuaded the IMF to release a $7.5bn tranche of its bail-out programme, its only hope of meeting dollar-debt repayments and staving off default.
The imf’s reluctance stemmed not from the fact Argentina is broke—lending to such countries is the fund’s purpose—but from the fact that most of the cash Argentina must repay this year is promised to the fund itself.
Argentina is a rare country with the imf as its biggest creditor, owing the fund a cool $40bn, roughly a third of its external debt.
By providing support, the imf has delayed disaster. It has also prolonged an increasingly absurd situation.
Yet Argentina is pushing the model to its breaking point. In 2018 the imf took a gamble and offered the country a bail-out worth $57bn, the fund’s biggest ever.
At the time, many observers thought it was too much for a country with Argentina’s patchy track record. It turned out also to be far too little to fix the country’s economy.
Argentina cannot afford its bills; the imf cannot cut the debt it is owed without forfeiting its status as preferred creditor.
The Economist 24 August 2023
IMF’s record-breaking rescue package for Argentina, with which its outgoing director Christine Lagarde was closely associated.
The fund has an unhappy history with Argentina, having agreed more than 20 programmes, most of which ended in failure.
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