«The IMF leads us to the massacre»- Corriere.it

Use an adjective to define the agreement between Buenos Aires and the International Monetary Fund: inflationary. It means that instead of reducing inflation, it actually favors it. To demonstrate this, the Argentine vice president Cristina Kirchner – in her speech in La Plata on the occasion of the presentation of the Escuela Justicialista Nstor Kirchner – shows a graph in which the depreciation of the currency rises clearly from January 2022 to February 2023. In April last year the inflation rate was 58%, in March 2023 it rose to 104%, highlights Trading Economics. a canned policy that applies to all countries, she says. For this Kirchner urges to renegotiate the measure, established in 2022 and review the clauses of that agreement.

Convertibility law

In a country with a bi-monetary economy like Argentina, the main cause of skyrocketing prices, he explains, is the change in the dollar. And this concept does not enter the heads of the technicians of the IMF. When he speaks – for over 60 minutes – Kirchner cannot help but juxtapose the past with the present of Argentine monetary policy. He mentions the hyperinflation of 1989, the Convertibility Law, approved in 1991 and wanted by the gentleman with the clear eyes, the then Economy Minister, Domingo Cavallo. With the new norm, the era of one is worth one begins because a fixed parity of the Argentine peso to the US dollar is established.

The causes of failure

But if at first it reduces inflation, later, with the increase in the interest rate in the United States, it generates a crisis in Argentina. As noted by the BBC Mundo the Economist Marina Dal Poggetto, Argentina is the only Latin American country that uses the dollar as anchor to survive the crisis of the 1980s. This, Dal Poggetto argues, is one of the main reasons that explain why convertibility was a failure and caused one of the most serious economic, political and social collapses in Argentine history.

The dependence on the dollar

Kirchner has no doubts about one principle: the problem of inflation has nothing to do with the fiscal deficit. Rincara: We have achieved more than what the fund required but inflation has gone through the roof all the same. Why? Because in Argentina inflation is linked to the scarcity or abundance of dollars. And then he adds: We need to review the 2022 agreement with the IMF, but not to not pay what we owe. What we want to concern the conditionalities, in the future we will have to re-discuss that the sums paid to the IMF are linked as a percentage to the trade surplus.

The four economies

The vice president also quotes between the lines Simon Smith Kuznets: That famous Nobel laureate who said that there are four types of economies: developed, underdeveloped, Japan and Argentina. Then he strikes up again: The IMF’s canned policies have actually yielded nowhere. There is no successful model. Kirchner, only the applause of those who would like to see her in the chair of president interrupt her. But everything leads us to think that he hasn’t changed his mind about the October 2023 presidential elections: I gave everything I had to give.