A small crowd gathered outside the headquarters of the International Monetary Fund (IMF) in Washington D.C today to watch a tango performance by dancers interpreting China and IMF head Kristalina Georgieva. A third activist and performer dressed as Argentina tried unsuccessfully to join the dance, with a sign behind them saying “It takes two to tango.”

The message was clear: Argentina was unable to join its biggest bilateral creditor or the lender of last resort. The performance was set up by the NGO Avaaz, which proposes in a new report that Argentina should be internationally recognized as an ecological creditor in order to restructure its debt through debt-for-climate and debt-for-nature swaps.

“If the IMF does not have the openness to think about creative ways to restructure debt, it will have many problems in the future,” Oscar Soria, campaign director at Avaaz, told the Herald. “Because Argentina isn’t the only country that is suffering and unable to pay its debt due to the climate crisis. It’s an enormous list.”

The proposal

Avaaz has put forward two reports urging the IMF to put the climate crisis, including biodiversity and soil health, at the heart of global financial reform. One of the reports focuses exclusively on Argentina as a paradigmatic case of a country that is an ecological creditor — which consumes less natural resources than it has — and a financial debtor. 

“The climate crisis is a debt crisis,” Soria said. “What Avaaz is proposing is an open conversation with technical foundations so that Argentina can be a pilot case that can scale up, showing the world that an inclusive, fair, and sustainable debt restructuring is possible, because it would be a game changer.” 

The report suggests establishing a “Public Debt Observatory” in Argentina for a “deeply participatory process to reinvigorate the national debate on debt” and pairing it with an international debt-clearing mechanism. 

“It’s always come to my attention that Argentina’s foreign debt has always been restructured without people knowing about it,” Soria told the Herald. “While states negotiate agreements, NGOs pick up the broken plates because it leads to more poverty and unemployment.”

The organization also proposes that Argentina develop debt-for-nature and debt-for-climate swaps, which would diminish the country’s debt by establishing ecological conservation goals which, if met, would lead to debt forgiveness.

“If we don’t have healthy ecosystems then we won’t have a healthy economy,” Soria said. “Reparation costs are generated because of preventable natural disasters.”

The current model 

The government and the IMF signed an Extended Fund Facility agreement in 2022 after renegotiating the US$44 billion debt former President Mauricio Macri acquired in 2018. 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.

The IMF’s Executive Board approved the latest review of Argentina’s program two weeks ago, allowing a disbursement of about US$5.4 billion. 

“The last review for us is basically a band-aid on a body that’s bleeding out, what’s really needed is a profound discussion about foreign debt that is also considered legitimate from the bases, provinces, and the people,” Soria said. “Today, the IMF has the opportunity to implement alternatives.”

Argentina has demanded recognition for being an ecological creditor before, with Economy Minister Sergio Massa calling for a global financial overhaul in February, but hasn’t made a concrete proposal.

“One of the reasons why the government is not putting anything on the table is that they don’t believe it will resonate with the IMF, “ said Soria. “We’re challenging that idea because Argentina actually has every possibility to present a restructuring proposal that would mean an economy that works for its people and for its ecology.”

“For the IMF’s conventional and conservative way of thinking, this seems revolutionary but it isn’t. Without making a single change to the rules, this can be done.”