A report approved yesterday by the General Auditors Office (AGN, its Spanish acronym) revealed that former President Mauricio Macri’s 2018 agreement with the International Monetary Fund (IMF) broke several laws and protocols. The report also concluded that the loan was harmful for Argentina’s public accounts.
The report was summed up in a video that was first presented by Francisco Fernández, president of the Public Debt Supervision Commission within the AGN.
“The signed agreement, of almost US$57 billion, was the most important in both Argentina and the Fund’s history, as it was 127 times the indebtment quota of our country,” he highlighted during his presentation.
“More than a debt, it was a crime,” said President Alberto Fernández —no relation to Francisco Fernández— today on Twitter in reaction to the report. “The AGN report shows that the IMF loan taken by Macri has violated the Argentine law and must be investigated with the full force of Justice.” .
Fernández said that the report will be incorporated into the legal complaint for “fraud and embezzlement of public funds” he presented against Macri and former officials of his government. The president also denounced that the lawsuit is being stopped by the judge in charge of it, María Eugenia Capuchetti.
Vice President Cristina Fernández de Kirchner — no relation to the president or the AGN commissioner — also chimed in on social media earlier today. She shared the video and said that the report was “not the opinion of a party or an opposition leader, but the result of a report that was approved by the AGN that details the enormous amount of laws that were violated that was committed in the granting and execution of the IMF loan.”
“What happened and what they did is a scandal,” she said in a Twitter thread.
In May 2018, ex-President Mauricio Macri announced that he would start conversations with the IMF to take up a loan on behalf of the organization. Argentina and the IMF signed a stand-by agreement for US$ 57 million dollars two months later, in July.
When Alberto Fernández took office, his government stopped the remaining disbursements from taking place, so the final amount was US$44 billion.
In March 2022, Fernández’s administration signed an Extended Fund Facility agreement after renegotiating Macri’s initial agreement. The deal includes an economic program that Argentina must comply with in order to receive disbursements every three months, which are used to pay for the previous debt with the IMF.
Both Fernández’s and Macri’s negotiations were heavily criticized by the Kirchnerite wing of the government, led by the vice president, repeatedly stating that the debt is illegitimate. In a letter announcing that she would not be running for “any candidacy” in this year’s elections, she pointedly said that “neither of the two presidents who accepted the IMF program retains electoral aptitude.”
The AGN video shows the results of its first report on the 2018 loan.
“It was an extraordinary and exceptionally high loan, the biggest in the history of both Argentina and the IMF,” it said.
Some of the key conclusions of the report, regarding the laws and protocols that were not complied:
- The agreement did not comply with the Financial Administration Act, which requires that the Central Bank analyze the impact on the balance of payments
- The agreement was signed by the economy minister, who at that point did not have legal power to authorize public indebtment
- The agreement didn’t go through Congress
- The presidential chief of staff and Finance Ministry did not intervene even though they should have done so by law
- There is no official, single document detailing the agreement that was signed in 2018
- There was no previous risk or cost analysis before taking up the loan
- The process to guarantee the transparency of the funds’ destination was not effective
The report also highlighted some of the deal’s costs and described some of thenegative economic consequences for the country. According to AGN:
- The government paid the IMF more than AR$ 13 billion pesos in commissions and expenses
- It increased Argentina’s debt-to-GDP ratio: in 2018 that figure was 84%, and in 2019 it was 89.4%. Before the agreement, in 2017, that percentage was below 60%
- The agreement sparked a capital flight that was considerable and continuous with no measures implemented to prevent it
- Almost 30% of the disbursements were used to finance the outflow of financial capital
- The IMF loan increased the risk of making Argentina’s public debt unsustainable, as it dollarized it, increased its amounts and shortened its maturities
The Fernández administration is currently renegotiating the 2022 renegotiated deal, as a drought of historic severity has devastated the harvests of key crops such as soybeans and maize, slashing the country’s inflow of dollars and complicating its attempts to accumulate international reserves — one of the targets of the IMF program.
Reporting by Lucía Cholakian Herrera and Facundo Iglesia