In the first quarter of the twentieth century Argentina “had one of the ten highest per capita GDP levels in the world, on par with Canada and Australia and surpassing both France and Italy.” What went wrong? On September 20, 1956, Argentina became a member of the IMF. Over the past 63 years, Argentina signed up 21 arrangements and the IMF considered Argentina as its ‘poster child’. As of September 30, 2019, outstanding purchases and loans stand at 31,913 million SDRs or $43,967 million.
In September 2018, Argentina “received the biggest loan package ever from the IMF…a whopping $57.1 billion” to be disbursed over a three-year period. By end-2018, Argentine annual inflation hit 48 percent, a 27-year high. As per the latest report issued by the Argentina Observatory of Social Debt, “32 percent of households and 41 percent of people are below the poverty line.” Argentina’s central bank had set a 60 percent floor on its benchmark interest rate. Imagine, supermarkets in Argentina use digital price tags because prices go up so fast and so frequently.
In September 2019, thousands of Argentinian protesters took to the streets of Buenos Aires, the capital, “demanding the government take action to address the deepening economic crisis.” According to Aljazeera, “The situation is dire: Argentines protest over food crisis.”
The IMF’s 2019 projected real GDP (percentage change) is negative 3.1 percent. The IMF’s 2019 projected consumer prices (percentage change) is 54.4 percent. Over the past 23 years, Argentina’s national government debt has grown from $70 billion to $350 billion. This year’s financing need is $100 billion.
Argentina, from being one of the richest countries based on per capita GDP, has become a story of debt, inflation and poverty. In the first half of 2019, poverty in Argentina rose to 35.4 percent – the highest officially recorded level since 2011. High rates of inflation and widespread poverty are turning into ‘white death’. Tuberculosis, a disease of poverty, is “making a comeback in Argentina.”
General elections were held on October 27, 2019. Alberto Fernández defeated Mauricio Marci, the president who signed up with the IMF and was leading the ‘Together for change’ coalition government. Argentina’s election is a story of “how inflation, debt and poverty combined to deliver a brutal primary election result” for a president who had signed up on the dotted line with the IMF. According to Bloomberg, the IMF’s $56 billion loan is in danger and that investors are betting on default.
According to the Financial Times, “For months Beto Marron faced a terrible dilemma: he could pay his rent and rapidly rising utility bills, or he could put enough food on the table.” Just imagine from “one of the ten highest per capita GDP levels in the world, on par with Canada and Australia and surpassing both France and Italy” Argentina is now a story of inflation, debt and poverty. What went wrong?
The writer is a columnist based in Islamabad.
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