The Front of All reached a neocolonial agreement with the Fund. It includes a sharp reduction in the fiscal deficit by 2024. The program will run for two and a half years. Far from the "never again" to the debt that the ruling party raised, now it assumes a new debt to cancel and validate the fraudulent loan that Mauricio Macri took. In addition, there will be ten quarterly reviews by the agency's bureaucracy: this implies a direct intervention in the policies of the national administration, particularly public accounts. Each review will put the national authorities on the verge of a nervous breakdown in the face of the potential withdrawal of support from the Fund and, therefore, the suspension of the shipment of fresh resources to cancel the old Macrista debt. The country is mortgaged.

In a brief message recorded at Quinta de Olivos, Alberto Fernández announced on Friday 1/28 that the Frente de Todos government had reached an understanding with the IMF. There he stated that "we had a rope around our necks and now we have a long way to go." This phrase depicts the way in which the ruling party tries to hide the consequences that this agreement will have for the living conditions of working people. The general features of the agreement offered in the press conference by Juan Manzur and Martín Guzmán, after the presidential message, make it clear that the noose will hang around the neck of the Argentine economy for at least a decade.

In a book published a few months ago[1], sociologist Juan Carlos Torre recounts the tribulations of Raúl Alfonsín's economic policy. In a tense moment of the negotiation with the IMF, Adolfo Canitrot, one of the economists on the economic team, tells Torre about the incidents of his trip to Washington with a mission to unlock an agreement[2]. "What is the Fund asking for?" asked Canitrot. His answer was the following: “Fund officials are going to talk about economic philosophy, but, basically, what they want is to see the fiscal account, the external account and the monetary account […]; one does not need to put a salary hypothesis since by putting a fiscal deficit hypothesis one is already defining public salaries and, to a large extent, the rest of the salaries”.

The quote is valuable because it sheds light on the details that Economy Minister Martín Guzmán offered at Friday's conference. The official detailed three key aspects of the agreement with the Fund: a path to reduce the fiscal deficit (fiscal account); the accumulation of reserves (external account); and a reduction in the financing of the deficit through the Central Bank (monetary account). That is, the same three accounts that Canitrot mentioned. The same recipe over and over again. It is not necessary to talk about salary adjustment because that adjustment is already defined in the other accounts.

Out of conviction or to produce a distraction effect on the true consequences of being trapped in the Fund's clutches, sectors of the ruling party toyed with the idea that an agreement could be, this time, different: they spoke of trusting in a solution novel technique that surpasses the traditional recipes of the organism thanks to the skills of Guzmán; to trust the offices of Pope Francis for a more humane capitalism, to trust the new management of the "comrade" Kristalina Georgieva, to trust the offices of the Nobel Prize winner Joseph Stiglitz and his neo-Keynesian friends. But at the last minute of the game, the Frente de Todos urgently sent the foreign minister, Santiago Cafiero, to speak with the true God in this mess: with the Government of the United States, which has 17% of the votes in the board of directors. of the IMF[3].

Canitrot told Torre about his feelings in an interview with the then number two in the United States Department of the Treasury, David Mulford: “it made me think, to myself, that if anyone doubted the existence of the Empire there we had it, in the flesh." Could Cafiero have experienced the same feeling in his interview with the Secretary of State, Anthony Blinken? It will never be known. What is known is that, a few days after his return, the Frente de Todos announced an agreement cornered by the urgency of a currency run that was lurking.

The ruling party entered this impasse because it ran out of reserves at the Central Bank. Among other factors[4], the lack of dollars in the monetary entity is explained by squandering US$ 7,185 million in payments to the IMF itself[5] since Alberto Fernández took office.

The negotiation took place in an important secrecy, behind the backs of the working people. Even in the last electoral campaign, the ruling party avoided talking about the Fund. Until now, the broad outline of the agreement has been known, which already draws a cloudy future for the country. But the negotiations continue. And since the Devil is in the details, new unspeakable conditions could appear in the fine print of the agreement[6].

The entire political regime – including statements by the Cambiemite opposition – the big business community, the most powerful journalistic groups, the establishment economists present the need to submit to the Fund's clutches as the only alternative. In reality, they defend a bailout of capitalist businesses to the detriment of the living conditions of the working majority. This is more evident in the celebration of the "markets", a euphemism to name the most speculative capital. The government gains air with the agreement and kicks the debt problem just a few years: the ghost of the "default" will reappear at the latest in 2025.

Kirchnerismo remained on the defensive and mostly silent: evidence that the agreement constitutes a bitter pill to swallow at the base of the Frente de Todos. The Government contributed, together with the right-wing opposition, to install in the popular majorities the idea that the agreement is a "necessary evil". The Left-Unity Front, together with several allies, denounced that this pact was being prepared since the electoral campaign. To face it, he proposes a program that marks an alternative that accompanies the experience of the working class and the popular sectors with the consequences that the Fund's recipes will bring.

Fiscal adjustment

The agreed program will run for two and a half years. In that period, the Government will pay the debt of US$ 44,500 million to the IMF inherited from the macrismo with a new loan from the organization. This means that new debt to the Fund is assumed to pay off old debt to the Fund. The new loan will have a grace period of four and a half years, for which it must be paid off with payments to be made between 2026 and 2032, in a disbursement schedule that is still uncertain. In this way, the ruling party buries a little more its slogan of "never again" to the debt.

The government must create the conditions that will make it possible in the future to cancel the commitments made from 2026 onwards: in Creole, taking money from somewhere to pay the debt. For that, an adjustment is needed, which is implicit in the announced fiscal path. It will begin with a cut in the primary deficit (that is, the difference between what it collects and what it spends without considering debt payments) to reach 2.5% of GDP (Gross Domestic Product) for this 2022. The Minister of Economy did not blink when saying this number while in December it defended a Budget with a different deficit: 3.3%. From these numbers, it stands out that the Fund imposed an additional cut of 0.8% of GDP for the current year: following the GDP calculations made by the Ministry of Economy for 2022, the additional cut of 0.8% imposed by the IMF would reach to around $481 billion or the equivalent of four months of minimum pension payments to four million seniors.

This cut is added to the one made during 2021 that included, among other adjustments, a saving of $160 billion in retirement and pensions[7] and to the one that Guzmán had decided for 2022 before the agreement. The dimension of the cut between 2021 and 2022 was concealed by the effect of factors operating last year that will not be present in the current one: collection by solidarity contribution; increased withholding collection thanks to high international prices; and the Special Drawing Rights (DEG) that the Fund sends to all member countries.

The path of fiscal adjustment will continue in 2023 with an additional cut of 0.6% of the GDP so that the deficit reaches 1.9% of the Product. The same will happen in 2024 with another 1% adjustment to reach the goal of 0.9% deficit in relation to GDP. This supposedly gradual path of adjustment will set strict limits to the growth of the economy.

The fiscal adjustment will directly affect the public budget. In the future, it will be revealed to what extent the adjustment will affect education, health, retirees, beneficiaries of social programs and State employees, among other social destinations of public resources. It is that these resources need to be released in favor of private creditors and the IMF.

As a disciple of Joseph Stiglitz (and his neo-Keynesian creed), Minister Guzmán knows very well that the path of reducing the fiscal deficit that has been committed takes away tools from the State to encourage economic growth[8]. The ruling party juggles to explain that there will be no adjustment in real terms to the budget, affirming that the reduction of the deficit will be achieved thanks to growth and higher collection. But it is precisely growth that is committing itself to the agreed deficit reduction path.

Inflationary adjustment

The government has a certain discursive margin to try to hide the adjustment because one of the privileged weapons to reduce the purchasing power of state budget items and popular income is through inflation. It is not an adjustment that is formally announced at a press conference, but rather it operates by the "invisible hand" of the "markets" through different mechanisms: the most obvious is the remarking of prices by the big capital that concentrates the production in the food branches, of popular consumption products or widespread inputs such as steel or cement.

But there's more. The proclaimed reduction of the exchange rate gap requested by the Fund does not mean anything other than an increase in the official dollar that, even if it is gradual, and does not include (for now) a violent exchange rate jump, will have an impact, as everyone knows in this country, feeding back the already high level of inflation. At the opposite pole, the exchange rate adjustment benefits exporters in particular (mainly agro-exporters) because they earn more Argentine pesos for each dollar exported and, more generally, the entire capitalist class via the devaluation of local wages measured in dollars.

Lastly, as stated in the Fund's statement on the agreement reached, a central aspect of the program will be the reduction of subsidies to public services. This implies an increase in gas and electricity rates that, although for the moment they are not announced with the scope of the macrista rates, will be applied to popular income that has accumulated four years of deterioration since 2018.

As the aforementioned anecdote of Canitrot clearly shows, an objective that is not very explicit, but always pursued, in the programs that the Fund applies throughout the planet is to attack real wages: that is, their purchasing power. Contrary to what Guzmán said at the conference on the increase in real wages, the combo of fiscal adjustment, reduction of the exchange gap and reduction of subsidies to public services, will place real wages in a fragile situation.

The new agreement comes about social conditions aggravated by the pandemic and by the restrictions on which the Argentine economy operated even before an understanding with the Fund: our country was one of the countries with the least public spending to face the consequences of the Covid, not only in comparison with the economic powers, but even in relation to neighboring countries with governments located on the right. The statements of the vice president, Cristina Fernández de Kirchner, with complaints about the fiscal adjustment are based on this reality: in 2021, according to CFK, the government spent more on payments to the IMF than on responding to the Covid emergency. A confession of parties, relief of evidence.

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Business for local speculators

The agreed path to reduce the primary deficit requires that in the transition the State obtain resources to cover the fiscal red: that is, cover the difference between what it collects and what it spend. Schematically, to cover this difference you can resort to various sources: a) external debt, but it is closed by the current debt crisis; b) Monetary issue from the Central Bank, but it will be reduced due to what was agreed with the Fund; c) tax increases, but it is never in the debate with the international organization to strongly affect the interests of big capitalists to “balance” the accounts with progressive taxes; d) financing in the local market.

The announced agreement leads to the development of this last financing method. This is how a juicy business is going to expand with the public debt in favor of the financial capital that operates in these pampas. This route was already being developed by Guzmán a long time ago, but now it will acquire a new scale. This means replacing deficit financing to the detriment of the Central Bank's monetary issue (which in itself is not good) and in favor of private capital (which is surely worse). It is evident that it will be more difficult for the Ministry of Economy to obtain financing from banks and investment funds than from the Central Bank (even though the latter is formally "autonomous" from the Economy): as agreed, the assistance of the monetary authority to meet the The fiscal deficit must be reduced from the 3.7% of GDP that it registered in 2021 to 1% for this year. This displacement of state financing in favor of private capital is a reinforcement, a reinsurance from the IMF, to force a reduction in public spending.

In order for financing in the local market to develop, an increase in the current interest rate scheme was announced: the idea is that they be positive in real terms (that is, that they beat inflation). It constitutes an additional incentive to speculation, which the Central Bank had also begun to put into practice before the agreement. The increase in interest rates implies making productive credit more expensive: for example, for a small producer who wants to buy a new machine or for a merchant who seeks to expand his modest premises, it will be more expensive to take out a loan. The same will happen with consumer credit: for a worker who wants to buy a refrigerator, a television or any product in installments, now it will be more difficult thanks to the Fund.

In this way, the increase in interest rates implies an additional obstacle to economic growth that the Frente de Todos claims to defend as a principle.

Raising dollars for debt

According to Guzmán's debt restructuring in 2020, the maturity schedule that Argentina faces with private creditors, with the wolves of Wall Street, is gigantic as of 2024 /2025. To this will be added, from 2026, the new debt to be paid to the IMF. This is such a demanding debt payment schedule that it will be practically impossible to deal with. Therefore, another debt crisis is on the immediate horizon.

The generation of fiscal resources is not enough to pay the debt. In addition, the State needs to acquire the dollars because a significant part of the maturities that it will face from 2024/2025 will be in US currency. In this sense, it is understood why another of the central points of the announced agreement includes the accumulation of reserves in dollars in the Central Bank: they are reserves to pay the debt. But the accumulation of reserves to pay debt in the country of the "external restriction" (that is, the shortage of dollars to sustain growth, which is partly explained by capital flight) implies that the dollars available in these pampas will be in dispute between those that must be saved to pay the debt and those that are needed to sustain economic activity. In a backward and dependent country like ours, growth depends on the availability of dollars: they are needed to import capital goods (machines, technology, etc.), intermediate goods (inputs) or final consumer goods.

In this context, the Taliban policy of the ruling party to promote mining, hydrocarbon and agricultural extractivism in order to obtain dollars in foreign trade is also understood: it is to burst the environment to pay the debt.

Economic stagnation and social degradation

The agreement further relegates urgent social needs when poverty affects 40.6% of the population and is around 60% among children and young people up to 14 years. Neither in the president's message nor in the subsequent press conference by Manzur and Guzmán were policies indicated to put an end to this grave social reality. Nor were economic growth goals made explicit, despite the fact that defending “recovery” is one of the catchphrases of the ruling party.

The growth of 2021 made it possible to recover the fall of 2020 due to Covid, but not the retraction accumulated since 2018. Not only that: growth sustained the serious social indices at high levels and increased inequality in income distribution: it is In other words, it is a growth that only a few kept, the most powerful in the country, the richest.

The Argentine economy has been in a situation of virtual stagnation since 2012/2013. ECLAC speaks of a "lost decade" for Latin America. The reality of the country is immersed in this panorama. For this reason, the 2021 growth, socially unequal and also by branches of activity, does not mean any "miracle". The combo of fiscal adjustment, increase in interest rates and accumulation of reserves affects economic activity in different ways, as an attempt was made to explain above when analyzing each factor in particular. With the IMF in command of the economy, it will be difficult for the country to emerge from this lethargic situation.

Sovereign delivery

The agreement was presented by the ruling party with the intention of hiding the serious consequences it will bring to the living conditions of working people. "We reached an agreement that does not contemplate restrictions, that postpone our development, does not limit, does not restrict, does not condition the rights of our retirees, does not force us to a labor reform and does not force us to reach a zero deficit," said President Fernández .

The Fund's agreement with the macrismo did not contemplate pension or labor reforms either. The rejection of the pension update formula was in the air (and continues to be) with the mobilization of December 2017. But that agreement still implied an attack on the income of the elderly and workers. The new pact, obviously, does not propose returning what was stolen from retirees in four years of adjustment or ending poverty pensions: only in this sense is it true that "it does not condition the rights of our retirees."

In addition, far from the affirmation of President Fernández, the lack of protection against inflation of the new pension update formula promoted by the Frente de Todos could imply new losses of the purchasing power of the elderly and other social benefits tied to that formula, such as the Universal Child Allowance (AUH), if the salary of active workers or collection deteriorates.

The capitalist regime, faced with the certain rejection of a general labor reform by the labor movement, seeks to advance by sector or by company. This is what the macrismo did with the relaxation of the oil agreement for Vaca Muerta, or as the Frente de Todos did, giving free rein to a relaxation of the automobile agreement at Toyota. Not only that: precarious work advances in companies that operate with applications with the approval of the Ministry of Labor; recent employment growth is characterized by a high share of informality; among other examples.

But the extended facilities agreement reached by the current government includes structural reforms: this is explained on the IMF website. It cannot be ruled out that this type of reform may appear as a requirement of the Fund if the agreed goals are not met. It is not unreasonable that the agreement should be readjusted in a short time: the Fund sows the conditions for failure with potentially unachievable goals. This happened even with the macrismo to whom the Fund "gave everything": in October 2018, a few months after the first agreement, it had to readjust the economic program with the closure of ministries, goals of zero monetary emission and zero deficit. for 2019.

The Fund will have a formidable instrument with the quarterly reviews that it will establish on the Argentine economy: this almost permanent scan will imply an unbearable interference in all state affairs, particularly in public accounts. The agency's bureaucrats will say what is right and what is wrong. This subjugation will be strengthened with an additional weapon on the temple of the Argentine economy in the hands of the constituents in Washington: every three months, the Fund will decide whether to send fresh funds to cancel the gigantic payments committed by the macrismo.

If the Fund decides to turn off the tap in the event of an Argentine default, it would cause a crisis of a greater dimension than the one that is supposedly being exorcised with the agreement.

Validate a scam

Macrista indebtedness is plagued by fraud. From the payment to the vulture funds (with the support of “little advantage” Sergio Massa) in response to a ruling by a New York judge; going through the issuance of the hundred-year bond made by the former Finance Minister, Luis Caputo, for the benefit of an investment fund of which he had been a shareholder and of the J.P. Morgan, bank of which he had been an employee; until the final chapter of the IMF loan, which implied an endorsement from the United States government, chaired by Donald Trump, for Macri's continuity in power.

During Macri's tenure, US$ 86 billion escaped from the country. That gigantic drain of resources that came out was financed with the debt. A Central Bank report indicates that "a small group of 100 agents made net purchases for USD 24,679 million"[9]: Telefónica, Pampa Energía, General Motors, Shell, Quilmes, Monsanto, Aluar, Procter & Gamble, Arcor and Techint, among many others.[10]. That leak is organized by the banking system.

After denouncing that the credit granted by the agency to Mauricio Macri was a political credit to facilitate his re-election, a credit that exceeded Argentina's quota, a credit that facilitated the flight of capital to tax havens, a credit that did not passed through Congress, the ruling party, without benefit of inventory, decided to validate the scam.

The Macrista fraud had serious consequences: for example, in the 19 months from June 2018 (first agreement with the Fund) to December 2019 (end of mandate), the purchasing power of wages fell 13 percentage points in the registered private sector, 10 percentage points in public employment and 19 percentage points among informal workers. The percentage of poor people went from 27.3% in the first half of 2018 to 35.5% in the second half of 2019. These numbers clearly show that the agreement with the Fund was against the interests of the population. At present, the figures of social hardships have worsened.

Do not repeat the history of decadence

History is abundant in testimonies of how the Fund sank the country since the dictatorship in this part. Wherever you look at it, the debt assumed by Macri with the IMF qualifies as odious debt and its payment must be rejected[11]. To avoid always repeating the same story, the left proposes an opposite solution to the capitalist regime: sovereign ignorance of the debt based on worker and popular mobilization; and a program of economic and social reorganization for the benefit of the majority.

A sovereign ignorance (non-payment), on the horizon posed by the left, is not the same as the adventure of a default, like Argentina's in 2001 or as Macri did with the debt in pesos at the end of his mandate. The default is a measure that capitalist states resort to when they run out of resources, to then return to pay, to do business as usual. It is an adventure because it is an isolated and circumstantial measure, which allows large business groups to do whatever they want: capital flight or pressure for a devaluation while the majority is plunged into poverty.

A sovereign ignorance supported by popular mobilization must be accompanied by a series of national defense measures that prevent capital flight and the economic chaos that speculator vultures want to generate. Establishing the nationalization of the banks through the expropriation of private banks to form a single public bank, under the management of the workers, would make it possible to end the emptying of the country via capital flight and take care of national savings; In addition, it would constitute a tool to finance public works (schools, hospitals, housing), to grant accessible credits for housing and other purposes to workers and popular sectors; or to help small traders or producers ruined by the crisis.

The nationalization of foreign trade is also key to eliminating the current private oligopoly managed by a few transnational and national companies that constantly speculate with the dollar and commit tax fraud. To put an end to the regime of privatized companies, of high rates and power cuts, the nationalization of public services is essential. The expulsion of the Fund from the country must be the work of the worker and popular mobilization. Freeing itself from dependence on international financial capital is essential to reorganize the economy so that all resources are directed towards the economic development of the country and attention to the most urgent social needs. To do otherwise is to submit to the eternal nightmare of the IMF.