Speaking as a guest at the G7 Summit in Hiroshima, Japan, Brazilian President Luiz Inacio Lula da Silva said today that the payment conditions imposed by the International Monetary Fund (IMF) on Argentina’s foreign debt are “destroying” the country. 

“Foreign debt, which has burdened Brazil in the past and is now destroying Argentina, is the cause of a flagrant and growing inequality that requires that the IMF consider the social consequences of its austerity policies,” said Lula in the first of two speeches he delivered at the summit. 

The Brazilian President is the only Latin American leader who was invited to the G7 summit, the annual gathering of the intergovernmental forum formed by the United States, Canada, the United Kingdom, France, Germany, Italy and Japan. 

The Brazilian government said that Lula da Silva also told IMF Managing Director Kristalina Georgieva that Argentina’s economic situation is a key element in order to maintain “regional balance” in South America.

“Argentina’s situation was the main topic discussed at the meeting between Lula and the head of the IMF, which lasted 30 minutes,” sources of the Brazilian government told Télam. 

Argentina’s economic problems have become a staple of Lula’s opposition to IMF policies, but they are also part of his discourse as a global actor seeking to push reforms on economic institutions and the United Nations, especially as the BRICS, the acronym for the leading emerging markets, namely Brazil, Russia, India, China, and South Africa, look to emerge as a new world pole. 

The Argentine government is currently negotiating with the IMF board on advancing the remaining disbursements scheduled for 2023 within the current Extended Facilities Program agreed upon to pay the US$45 billion debt that was contracted by former President Mauricio Macri.

Lula’s references to Argentina are in line with the promise he made to President Alberto Fernández during their recent meeting in Brasilia that he would intercede on the country’s behalf with the IMF as well as BRICS banks to help bolster the monetary reserves of Argentina, one of its main trade partners in order to keep commercial trade between both countries operational. 

In the meeting he held with Fernández in Brasilia, Lula da Silva said the IMF “had a knife to Argentina’s throat,” and he proposed involving the BRICS Central Bank in order to fully guarantee Brazilian exports to its main trade partner in Latin America. He made this offer after his initial idea of diverting funds from National Bank for Economic and Social Development, a developmental bank associated with the Brazilian Economic Ministry, to finance state-to-state guarantees for exports failed to receive support from his government.