BUENOS AIRES: International Monetary Fund (IMF) says record US $ 56 billion (RM 236 billion) program for Argentina failed to “improve confidence” and was “fragile since its inception Despite the loan amount, and that both managing capital flows and reprofiling private debt may have been addressed in 2018.
The staff report released on Wednesday, known as the “ex-post assessment” and led by IMF Deputy Director Odd Per Brekk, is a key step in IMF procedures, which require staff review a program with exceptional access.
“An early debt operation, combined with the reintroduction of capital flow management measures, could have delivered a more robust program,” the report said.
Although the assessment added that the need for a debt transaction was unclear at the start of the program, it was later ruled out by the Mauricio Macri administration.
Argentina’s three-year standby agreement, with total disbursements of up to US $ 44 billion (RM185 billion), is more than 10 times the country’s allocation with the fund.
President Alberto Fernandez’s administration is negotiating a new program with the IMF to reschedule payments owed to the Washington-based multilateral lender.
The staff assessment noted that “greater burden sharing with other public creditors could have, in addition to providing additional financing, signal broader support from the international community, both of which would have been able to build confidence ”.
“The lack of ownership by all branches of government has been fatal for the program,” the report adds.
Additionally, the rapid exchange rate depreciation from mid-2018 made the targeted disinflation path unrealistic due to the high pass-through.
The existing debt instruments were “very problematic”; The liabilities of the central bank known as Lebacs were not well understood at the time of the program application.
The stand-by deal was an “IMF-funded bailout for private creditors and investors who had speculated on carry trade opportunities.”
The real objective of the program was to maintain the government policies of 2018 on IMF financing at all costs. – Bloomberg