Milonga Triste

Argentina is a tragedy of poverty in a country that should be among the world’s richest. Compared to other middle-income and rapidly-growing nations^[1], Argentina ranks: (a) on real per capita economic growth, 13th lowest of 14; (b) on the coefficient of variation of real per capita growth, 1st (highest) of 12; (c) on growth of per capita electricity production, 13th lowest of 14; (d) on capital formation, 12th lowest of 14; and (e) on population growth, 10th lowest of 14.

The recurring theme in Argentina’s drama is wild currency panics. The country is now having yet another panic with the novel feature that the US Treasury is nobly committing to rearrange the country’s debt without getting anything in return ^[2]. Professional opinion about this rearrangement is negative. The US economics commentariat (deLong, Krugman, Obstfeld, Tankus) disapproves, rightly, of what the US is doing. Judd Legum (https://substack.com/@juddlegum) has ^[3] explained the possible personal motivations of the US intervention. Senator Warren has stressed the cost of US commitments in terms of the welfare of ordinary Americans, few of whom can lend billions to insolvent debtors and who, for that reason, are consulted less frequently by Cabinet officials. The Economist newspaper seems to be the one hand jerking clapping about the US-Argentina deal.

This Substack follows an earlier post that compared the US bailout of Argentina’s creditors to that of the IMF-US-World Bank bailout of Mexico’s creditors in 1994-96. The point here is the abandonment by the IMF of its responsibilities on Argentina, notably by its MD (Kristalina Georgieva, Bulgaria), its recently resigned DMD (Gita Gopinath, USA)^[4], its Board of Executive Directors, and Scott Bessent’s personal representative in the IMF, Dan Katz, who is now Deputy Managing Director (DMD) of the Fund.

I first present the limited available public information^[5] about the US bailout. I then discuss earlier Fund-supported programs in Argentina to argue that the IMF has compromised its integrity (I see you smile) in that it has failed to promote growth, poverty reduction and productive public services and indeed seems to have done little beyond churning the country’s account in the Fund.^[6]

The US bailout in 2025 (and beyond)

Bessent’s statements on the US assistance are the usual US administration guiso of lies, bluster, and gaslighting. Bessent claimed: (a) Argentina has “strong economic fundamentals”; (b) the country is making structural changes that will “generate significant dollar-denominated exports and foreign exchange reserves”; (c) Argentina has a “prudent fiscal strategy”; (d) its policies are “sound”; and its (e) “exchange rate band remains fit for purpose.” These claims are false, unless one contends that the fitness of the exchange rate band is defined as that of maintaining repayments to external creditors enjoying preferential access to US officials.

The US intervention has two parts, for now. The first is a US$20 billion “currency swap framework with Argentina’s central bank”. Bessent has said that the US Treasury has purchased Argentine pesos in an unannounced amount; though one assumes this purchase is a loan and not a grant, Treasury did not mention repayment terms, which is surely appropriate for reliable borrowers such as the sovereign Republic of Argentina.^[7] The second part is the characteristic US administration hand-waiving about another US$20 billion from the US private sector, as equity investments, or loans with USG guarantees, or something else altogether, maybe even a pony. Bessent has stated that “the US Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets” implying some third thing, but a third intervention, and the unstable markets to which it might apply, are left to the imagination. This third deal, whatever it is, might require resources from the US Federal Reserve, which are uncertain despite the inevitable whining from administration officials about the Fed.

Maurice Obstfeld, a former Chief Economist at the IMF, wrote^[8] on October 6 that “The Trump administration’s goal appears to be to keep the Argentine peso within the band that the Milei government announced last April … at least until Argentina’s October legislative elections.” The (wholesale) peso,^[9] from April to late October, would vary between 1,000 to 1,400 pesos, with the upper bound indicating a weaker peso (it would cost more pesos to buy 1 US$) and the lower bound indicating a stronger peso (it would cost fewer pesos to buy 1 US$). Obstfeld’s critique of the policies defending the peso is that Argentina is not the Euro zone and that the Governor of the BRCA^[10] (the Argentina central bank) is not Mario Draghi. Argentina alone does not have the capacity to defend its currency in a manner that calms bond markets, which are the real problem of an erratic peso. Obstfeld observes that “This [US-supported] strategy will not rescue Argentine debt or the peso for long, but it will allocate American taxpayers’ money toward reducing the losses of global investors who may wish to exit from Argentine debt.”

Obstfeld’s conclusion that the “United States will ultimately not go to the mat for Argentina’s peso …” is only partly correct. The US is already going to the mat for two groups affected by the level of the peso, even if the wrestling involved is likely to last only a few rounds.^[11] A first group, needing immediate help, is Milei and those bondholders who are long the peso and want to exit. Milei wants to hang on through the October legislative elections after which he seems to have adopted the happy-go-lucky attitude of his Yanqui mentor: “we’ll see what happens”. The bondholders with long positions want to get out before the pretense of the upper bound on the peso/US$rate is abandoned and bond prices retreat. A second group of those short on the peso, in less need of urgent assistance, also has two sorts of members. Those who are short the peso, or plan to be, need to know when it will drop. (Bessent made his fortune shorting the pound, so he knows the value of information in this market). Those who are short the peso now have some better idea about when it will fall—slowly, after Christmas, as wealthy Argentines^[12] return from shopping in Miami and Barcelona, and quickly, at the time of the next program review in January when further Fund disbursements in defense of the peso will become much smaller. Another faction in this group of peso shorts includes those waiting to buy Argentine debt after the fall^[13] and to hold that debt through the next restructuring to redeem at a premium. So, the Treasury is, as it were, fighting on two separate mats in defense of US investors with divergent interests in the future of the peso.^[14]

Milei did well in the legislative elections, held in late October. He can now rule more by legislative action and less by decree, though this is a result with which he is probably emotionally uncomfortable and one that his American owners might encourage him to resist. Argentine bonds rose $0.10-$0.12 on the election results. The peso is more or less stable in the upper 1400s, so those long the Argentine currency have gotten their Christmas wish at least until the bearers of neoliberal orthodoxy arrive in January. While liberal papers urge Milei to take long-term initiatives (notably to float the peso) one should not expect much. Milei’s is a temperament that cannot concentrate for extended periods, a long-term view is rarely found among libertarian grifters,^[15] and, to the point about the IMF, the Fund has no remaining financial leverage to support Argentina through the turbulence that floating would generate and has shown no steel for additional wealth taxes[16].

The IMF in Argentina, 1991-2001

The Fund has supported several Argentina programs in the past 35 years: (a) Three Stand-by Arrangements (SBAs) and two Extended Fund Facilities (EFFs) from 1991-2001; (b) SBAs in January and September 2003; (c) an SBA launched in June of 2018 and canceled in July of 2020; and (d) an EFF beginning in 2022; and (e) an Extended Arrangement under an Extended Fund Facility in 2025 and continuing today. In examining those programs, we see the habitual arrogance of IMF management in that they allow their staff to do excellent work while ignoring its operational conclusions because they know that most people, especially the Fund’s Board, do not understand the work and readily accept excuses for poorly designed programs.

The Fund’s Independent Evaluation Office ex-post evaluation (IEO 2004) of the Argentina program from 1991-2001^[17], anticipated the problems that persisted when the institution approved an SBA in 2018, when it blessed the EFF in 2022 and again in 2025 with the new EFF. The 2004 IEO report attributed a 2000-2002 currency crisis to “ … the failure of Argentine policymakers to take necessary corrective measures sufficiently early, particularly in the consistency of fiscal policy with their choice of exchange rate regime. “ In English this means—capital flight is inevitable when inflation persists and the currency peg is too tight; taxes were too low to maintain pensions, consumer subsidies, social protection, and other domestic spending; low taxation and high spending meant continuous borrowing;^[18] continuous borrowing meant higher interest on external and domestic debt, worsening the consolidated public deficit; the choice of exchange rate regime—overvaluation ostensibly to fight inflation but partly as a way of rationing hard currency—with the inevitable effect of repressing exports; and Fund staff did not check what the provinces were spending and borrowing. The IEO 2004 report concluded that “The IMF … erred in the pre-crisis [before 2002] period [a period with three SBAs and two EFFs] by supporting the country’s weak policies too long, even after it had become evident in the late 1990s that the political ability to deliver the necessary fiscal discipline and structural reforms was lacking”. IEO 2004 went on to say the IMF’s use of its resources to defend the peso in 2001 was not “sustainable: and that the Fund should have “pushed for an alternative approach”. The Fund is making the same mistake in 2025, as Obstfeld has argued^[19] in “America’s Argentina rescue won’t save the peso for long”.

The 2004 IEO report has this remarkable passage:

“… in early 1999, IMF staff began to consider more seriously the viability of the [exchange rate] peg and possible exit strategies. However, consistent with established practice, but contrary to recent Executive Board guidelines, the issue was not raised with the authorities in deference to the country’s prerogative to choose an exchange rate regime of its own liking. Neither was the issue brought to the attention of the Executive Board. Not only was the staff concerned that discussion of exchange rate policy, if leaked to the public, might cause a self-fulfilling speculative attack on the currency, but it also knew from its analytical work that the risks and costs associated with any exit from convertibility were already very high. “

This passage admits several mistakes: (a) “established staff practice” was “contrary to Board guidelines”; (b) staff were afraid to discuss the peg with the authorities despite knowing that the peg would fail; (c) staff did not bring the peg to “the attention of the Executive Board”; and (d) staff were under the delusion that discussion of exchange rates could be stopped from leaking to the public.^[20] It is Argentina’s “prerogative” to “choose an exchange rate regime of its own liking” but it is also the option of the Fund to refuse to lend for bad policies, although this option is generally only exercised against borrowers who do not enjoy le privilege exorbitant of being in the franc zone or those who are otherwise too weak to resist.

The final years of the 1991-2001 Fund Program in Argentina were catastrophic. Real per capita income fell some 20% from 1998-2002 leaving the 2002 level about the same as that of 1990. The longer-term impact of the 1991-2001 Program was no better. Argentina’s real per capita growth rate after that Program remained low at 1.1 percent from 2000-2023, the lowest in a sample of 12 middle-income nations. Growth was chaotic; the coefficient of variation (the standard deviation divided by the average) of its growth rate from 2000-2023 was 0.72, twice that of the next highest country in the global sample.

What did the Fund learn after the 2018 program ?

The Fund had no program in Argentina between 2003 and 2018. The country grew modestly from 2003- 2010, when it was sharply affected by the global recession. There was some recovery after 2012 followed by some ups-and-downs such that the 2018 level of per capita income was about that of 2009. Recovery after the 2008-10 recession was pushed by the country’s persistent primary deficits financed by the national tradition of borrowing irresponsibly, and by 2018, public debt had become unmanageable without another appeal to the Fund.

What follows is a summary of the Fund’s ex-post evaluation^[21] (henceforth IMF 2021) of the SBA approved in June 2018. IMF 2021 described the origin of the 2018 SBA as: “The government elected in late 2015 rapidly opened the capital account and borrowed abroad, while adopting a gradual approach to addressing economic imbalances—particularly fiscal deficits—setting the stage for a sudden stop and the SBA request [approved in June 2018 and extended in October 2018 to US$57 billion (1,227 percent of Argentina’s IMF quota)].” The SBA, in the words of IMF 2021, was “designed to deal with a temporary liquidity shock by catalyzing renewed capital flows.^[22]” The Fund’s misconception—liquidity shocks in Argentina are rarely temporary and uncontrolled capital flows swirl into shorter and shorter-term borrowing at higher and higher prices—allowed it to sell an over-generous program to its Board while refusing to use two obvious instruments: “ … a debt operation and the reintroduction of capital flow management measures^[23] …” Moreover, the Fund “ … accepted the authorities preferred macroeconomic projections [at the time of approval], which proved too optimistic; [and] fiscal consolidation was low quality and structural reforms unaspiring.”

The Fund’s projections in 2018 (summarized in Figure 2, p. 27 of IMF 2021) were, as is often the case,^[24] at variance with the actual values reported in Q4 of 2019. The gap (baseline projection - actual) was (+) 2 percentage points of GDP on real growth; (-) 30 points on consumer price index (CPI) inflation; (-) 0.5 percentage points on the unemployment rate; (+) 10-15 percentage points on the real effective exchange rate (REER); and (-) 25 points on public debt in percent of GDP. The under-projection of the stock of public debt in percent of GDP was highlighted in IMF 2021 when the debt sustainability analysis “ … rais[ed] questions of whether the liquidity crisis was becoming a solvency crisis”.

The June 2018 SBA was extended in October 2018 and then canceled in July 2020 after completing only four of 12 reviews. The SBA failed in its objectives of “ … restoring confidence in fiscal and external viability, while fostering economic growth”. During the brief program period, real wages fell while poverty and unemployment rose. The IMF 2021 ex-post evaluation found that “From a conceptual standpoint, the Fund fell short in two core aspects: it was reluctant to discuss the exchange rate regime and the fiscal advice missed key elements of debt dynamics.^[25]” The 2021 evaluation referred to the “disorderly abandonment”—unusually direct language for the Fund—of the old currency peg in 2002 as part of the debt and peso crisis of 2001-03, an “abandonment” that should have forced Fund management to insist on including the exchange rate regime and “debt dynamics” in the 2018 SBA, but did not.

The 2020-2021 bond restructuring

Argentina did a 2020 restructuring^[26] of central and provincial government debt owed in foreign exchange to private creditors. An IMF staff note^[27] before the restructuring began honestly—“Argentina’s public debt is unsustainable”—which was reasonable given the roughly 30% of GDP increase in foreign liabilities between 2017 and 2018. Argentina did achieve some reduction in its debt stock from the restructuring from 2018 (roughly the peak of gross federal debt in percent of GDP) to the most recent Fund review (August 2025). Fund staff noted (2022 EFF, page 37) that sovereign spreads for Argentina remained high after the restructuring and that policies to “support fiscal consolidation and reserve accumulation would help to … support a gradual decline in sovereign spreads.” We will return to that bit about “reserve accumulation” below.

The Extended Fund Facilities of 2022 and 2025

Argentina’s fiscal situation remained precarious in early 2022 despite the bond restructuring. It was notably unable to amortize its debt to the Fund on the schedule agreed in 2018, having repaid only US$13.2 billion of US$23.9 billion owed to the IMF through end-2022. In light of Argentina’s position in the Fund and the country’s uneven recovery, the Fund’s Board approved an Extended Fund Facility (EFF) in March 2022.^[28] The EFF, in an amount of US$44 billion (1,001 percent of quota), was in practice a restructuring of the 2018 SBA that had been canceled in June 2020, with some hand-waiving about COVID. The EFF recycled the Fund’s generally unachieved ambitions in Argentina, as follows: (1) “Credibly improve public finances”; (2) “Start reducing persistent high inflation”; (3) “Strengthen the balance of payments”; and (4) “Enhance the sustainability and resilience of growth” … “ through reforms to mobilize domestic saving”, etc.

At the time of the 2022 EFF, the Fund team faced the delicate job of convincing its Board that Argentina was illiquid, not insolvent—it helps that those definitions are notoriously plastic—and had therefore to justify the additional EFF on top of the balance of the SBA from 2020.^[29] The staff report argued that Argentina met three of four of the criteria for exceptional access to Fund resources, specifically:

(1) “exceptional balance of payments pressures on the current account or the capital account”;

(2) “high probability that the member’s debt is sustainable in the medium-term”;

(3) “the member has prospects of gaining or regaining access to private capital markets [in a period and on a scale] to meet its obligations to the Fund; and

(4) A fourth criterion (which staff judged had not been met at Board approval in 2022) is that “the policy program provides a reasonably strong prospect of success including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment”.

Some comments are warranted on the four criteria. We know from the Fund’s analysis that the “exceptional pressures” occurred because the authorities held to an external peg that was uncompetitive;^[30] in other words, while there was an external shock from COVID, the authorities had not adjusted the peg fast enough, resulting in selling pressure on the peso and in a rise in domestic interest rates. Moreover, it is difficult to see how staff could have thought that the member’s debt was sustainable in the medium-term given Argentina’s long history of renegotiations, the most recent of which was completed 18 months before.^[31] Third, the staff was arguing that Argentina should borrow on private markets to repay its obligations to the Fund, which is the inverse of how a bond restructuring is supposed to work (trade short-term obligations for long). This third argument, moreover, claims that Argentina has “prospects of regaining access to capital markets in 2025 by the time obligations to the Fund fall due” (late 2026). The fourth criterion, which Argentina did not meet in the view of Fund staff, is an odd thing. Few doubt Argentina’s institutional and political capacity so the hedging on “reasonably strong prospect of success” implies uncertainty about “the member’s adjustment plans” forcing the reader to wonder—why did the Fund not insist on a stronger program to raise the chance of success ?

The Fund’s 8th Review of the 2022 EFF (June 2024) was presented to its Board with the taciturn idealism that characterizes the institution’s public pronouncements. DMD Gopinath announced that the program was “firmly on track”, with, inter alia, “a marked turnaround in reserves” and an “upscaling [of] social expenditures”. These happy results allowed staff to project only a small net increase (Fund disbursements > repayments) in Argentina’s obligations of some US$2 billion in 2024, no further disbursements or repayments in 2025, and some US$19.2 billion in repayments from 2026-29, allowing Argentina to clear its outstanding obligations with no new disbursements after 2024.

Then this happened in the first quarter of 2025. While the BRCA’s gross reserves had been tolerably stable around US$31 billion in the final two months of 2024, they fell steadily from $31.7 billion on 21 January 2025 to US$24.2 billion on 14 April 2025. The Fund was obliged to intervene again with an “Extended Arrangement” under the EFF in an amount of US$20 billion, with an immediate disbursement of US$12 billion on April 15, 2025. Fund management did its usual happy talk about how well things were going but such talk is not credible when the institution has just rescheduled the debt of its largest borrower for reasons that it will not admit in public.^[32]

Libertarianism is when you run out of the IMF’s money

The Fund^[33] bears some responsibility for Argentina’s long tragedy. It has repeatedly supported ineffective programs in its largest borrower, has broken its own rules more than once, has not been honest about its failures (until later program evaluations which few people read) and is making the same mistakes today.

Fund management knows that the program commitment to return Argentina to global capital markets cannot be honored with anything other than short-term instruments. One may say that a vague and admittedly commonplace commitment made in March 2022 can be forgotten in view of the general euphoria along 19th street that attends approval of a major program. Yet, the same commitment was renewed in June 2024, when the 8th Review stated “ … as reserve coverage improves, a gradual return to international markets is expected to start in 2025”. The same expectation was raised by a second EFF in April 2025 and was apparently made good in early June when the country issued new peso bonds (subscribed in dollars).^[34] Despite these steps, borrowing $20 billion from the US Treasury in secret is not a measure that will restore confidence in Argentina as a borrower or in the IMF as an adviser.

Fund management probably knows that the terms of the (as yet hypothetical) second US$20 billion from the US are so nakedly rapacious that they cannot be revealed to its own Board. The advantage of not having a formal review of the second amount is that the Fund can pretend that it does not know its terms or those of any related guarantees and collateral, or of the distribution of eventual default costs. If that second amount is constituted of, say, private bank loans guaranteed by the US Treasury,^[35] then the Fund ought to know about the pricing of the guarantees. If the second amount is to buy Argentine assets (mines, land, oil and gas, usw) at fire sale prices, then the Fund should be insisting on better terms for the borrower given that the receipts from asset sales will be used to repay the Fund.

The IMF understands that Argentina would not have met its reserve targets without the exceptional disbursement of US$12 billion in April 2025. The country is moreover unlikely to meet its remaining 2025 and 2026 reserve targets without US Treasury assistance. The Fund now predicts that gross reserves end-2025 will be about US$31 billion and that they would grow to about US$66 billion at end-2028. Recall that the Fund had projected in the March 2022 EFF Staff Report that gross reserves would be US$51.5 billion at end-2023, US$55.5 billion at end-2024, and US$60.7 billion at end-2025. We are somewhat in the dark about net reserves but the Fund admits that the June program target was missed. Reconstitution of reserves is the cornerstone of Fund programs and, in Argentina, that stone has eroded.^[36]

A final problem in the Fund’s behavior is its characteristic indifference to promoting economic growth, which is the only way to stop the panics. The US Treasury-IMF-World Bank program in Mexico in the 90s had a workable model—a nominal devaluation before the program had even started, abandonment of an overvalued peg, adequate relief on external debt service, and investments in the real economy. The Fund, faced as it is with a country that rejects nearly unanimous advice about floating, one whose efforts to raise investment, domestic or foreign, consist of promises which have not been honored in the past, as usual, cannot stop itself from putting the burden of adjustment on the expenditure side notably in projecting cuts in federal (and provincial) capital spending, cuts which damage long-term growth and which harm the political credibility of investments in public infrastructure.

The Fund has, for more than 25 years, tried to re-invent itself as a development institution in an attempt to make its caciques look better at Davos. The Fund’s dramatic and persistent failure on growth and poverty in Argentina ought to have stopped that re-invention. The institution’s failure should have made the Fund work on what it is supposed to do—provide short-term liquidity and policy advice to raise investment and to make it more productive. Instead, the Fund has repeatedly bailed out Argentina’s creditors when the country drifted close to insolvency. In the current panic, the IMF has looked the other way on an opaque deal with the US administration that will buy the borrower a few months at best. The voters of Argentina will eventually deal with Milei, but there is no such accountability mechanism for Fund management and there should be.

* * *

[1]. Argentina, Brazil, Colombia, India, Indonesia, Malaysia, Mexico, Morocco, Nigeria, Pakistan, Poland, Thailand, Türkiye, and Viet Nam.

[2]. My Substack—“The general rule of bailouts is—first, help the lenders” at “https://open.substack.com/pub/johnmcintire/p/the-general-rule-of-debt-bailouts?r=lxiat&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false”—contrasts the US role in the Mexico bailout of 1994-96 with that in Argentina today.

[3]. Credit to Michel de Cryptadamus (https://substack.com/@cryptadamus) for elucidating links among the various crypto scams in and around Argentina and the US.

[4]. Gopinath, whatever Panglossian views she may have expressed while visiting Argentina in February 2024, after Milei’s investiture in December 2023, was well qualified to be Fund DMD. Her successor, Dan Katz, was Bessent’s Chief of Staff at Treasury and is unqualified to be a Fund mission member (although he probably has that essential Fund habit of speaking imperiously to the national authorities).

[5]. Public information surely covers less than what is really going on.

[6]. The Fund has lent US$132.3 billion in nominal terms to Argentina since 1990 and received US$76.3 billion in repayments plus US$19.5 in fees and charges. In other words, the Fund has taken a fee of 14.7% (100*19.5/132.3).

[7]. The Fund’s 1st Review of its 2025 EA-EFF notes “ … the authorities will seek to raise additional financing, including, depending on market conditions, through planned regular auctions of peso-denominated bonds subscribed in US dollars. These operations will aim at facilitating the management of large FX debt service payments—Treasury and BCRA FX obligations between August 2025 and January 2026 are estimated at US$10 billion—while not adding to FX-denominated debt …”.

[8]. https://www.piie.com/blogs/realtime-economics/2025/americas-argentina-rescue-wont-save-peso-long

[9]. Retail dollars were quoted at 1,500 (above the upper band) in the first week of October in BA. One trick for the BCRA would be to ration wholesale dollars at rates below the upper band to the elect, to maintain the fiction of staying with the target band, while leaving the preterite to peck for bargains in the grubby FX bureaus.

[10]. Governors of the BCRA are changed with some frequency.

[11]. My Substack, “The general rule of bailouts is—first, help the lenders” “https://open.substack.com/pub/johnmcintire/p/the-general-rule-of-debt-bailouts?r=lxiat&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

[12]. There is a bit of BA slang for members of Argentine governments and indeed their US and IMF friends—“cheto”, meaning posh or chic, with the pejorative connotations of snobbish and pretentious.

[13]. Gregory Makoff’s, “Default: The landmark court battle over Argentina’s $100 billion debt restructuring” is informative.

[14]. Makoff shows that the Yanqui bondholders are not alone in their zeal to throw people into the street, but Americans are the only ones who will get much sympathy from the US regime. Makoff further shows that Yanqui prospectors in Argentina are not easily divided into red or blue. Note that the price of Argentina 2035 bonds has varied between $0.25 in late 2023, just before Milei’s election, and $0.50-$0.60 in October 2025, offering good prospects for future gambling on the fate of Milei and his economic management.

[15]. One wonders if Milei has seen The Grifters: “ … forget the long con, if the fool tips, you’re caught, and you’ll do time …”

[16] A tax amnesty and increased wealth tax in 2016 (analyzed by Juliana Londoño-Vélez and Dario Tortarolo, “Revealing 21% of GDP in Hidden Assets: Evidence from Argentina”, World Bank Policy Research Paper 10639) disclosed wealth equal to 21 percent of the country’s GDP.

[17]. https://www.imf.org/External/NP/ieo/2004/arg/eng/pdf/report.pdf

[18]. Argentina ran a primary deficit every year from 2012 to 2023.

[19]. Maurice Obstfeld, https://www.piie.com/blogs/realtime-economics/2025/americas-argentina-rescue-wont-save-peso-long

[20]. Former Fund DMD Anne Krueger must be credited with pushing for the widespread use of collective action clauses in loan agreements, a feature that benefitted Argentina in the 2020 restructuring.

[21]. IMF Country Report No. 21/279, “Argentina: Ex-post evaluation of exceptional access under the 2018 stand-by arrangement—press release and staff report”.

[22]. Bessent might be trying to use what is supposedly short-term liquidity to Argentina (the $20 billion swap of dollars for pesos) as leverage for to-be-specified private investments of another $20 billion. That this leveraging strategy, depending as it does on the delusion that Argentina’s fiscal embarrassment is only temporary, has failed in the past does not seem to deter the US Treasury.

[23]. Readers unfamiliar with IMF staff writing will note that “a debt operation” signifies “a debt reduction operation” and “capital flow management measures” signify “capital controls”.

[24]. Studies of Fund staff projections in the early 2000s (using data from the 1980s and 1990s) tend to show “optimistic projections”, that is Fund staff often overestimated rates of growth and quality of fiscal policy, while underestimating inflation.

[25]. While I respect the integrity of the IMF 2021 evaluation team, the expression “missed key elements of debt dynamics” seems unnecessarily obscure, even in an IMF report.

[26]. Manuel Leon Hoyos described the 2020 restructuring in https://som.yale.edu/blog/argentina-s-path-to-debt-relief-from-private-creditors. Makoff (“Default”, Kindle, p.351 describes the 2020 restructuring as “quick and clean”, a result achieved “because virtually all of Argentina’s bonds included CACs [collective action clauses that protected] the transaction from disruption by holdouts”. The IMF (8th Review of the 2022 EFF, Table 9 shows substantial debt both in foreign law bonds “with new contractual clauses” and in foreign law bonds with “old contractual clauses”).

[27]. The Fund issued the note on March 19, 2020. https://www.imf.org/en/Publications/CR/Issues/2020/03/20/Argentina-Technical-Assistance-Report-Staff-Technical-Note-on-Public-Debt-Sustainability-49284

[28]. The generous EFF of 2022 was approved in the Fund by Western Hemisphere Department Director Ilan Goldfajn (Brasil), who has since been elected President of the Inter-American Development Bank … Verguenza para quien piense mal.

[29]. At the end of 2021, the fiscal year preceding the 2022 approval of the EFF, Argentina owed US$42.5 billion to the Fund in addition to some US$3 billion to private creditors (the latter figure is calculated from IMF, 2022 EFF, page 28, including fn 22).

[30]. IMF 2022 EFF, page 21.

[31]. Argentina is not only a bad debtor; it is an unreliable equity partner; there are more cases against the country in the World Bank Group tribunal known as the International Centre for Settlement of Investment Disputes (ICSID) than against any other nation. An example is reviewed at https://legalblogs.wolterskluwer.com/arbitration-blog/aes-v-argentina-icsid-award-closing-the-chapter-on-argentinas-2001-2002-crisis-saga/

[32]. The Fund admits (IMF Country Report 25/219, “First Review under the Extended Arrangement under the Extended Fund Facility”, August 2025, page 10, fn 9) that “A better understanding of the recent rise in errors and omissions in BOP statistics is necessary as it could suggests higher resident outflows following the ongoing easing of FX restrictions, including to offshore financial centers”. In English this means—the Fund can’t account for some of the dollars fleeing offshore.

[33]. We will return to the World Bank in a later post. At this point note that the Fund’s bailouts of Argentina’s creditors include budget support from other financial institutions, notably the World Bank and the IADB, of some US$5.8 billion in 2025 or roughly 80% of all IFI support to Argentina.

[34]. The 3-year bonds issued in late May/early June have spreads of some 750 bp over US Treasuries.

[35]. Another possibility is guarantees from the World Bank which is just the kind of account churning that would appeal to current Bank management.

[36]. The Fund and the authorities are playing some kind of accounting game to make the net reserve position look stronger, using BCRA swaps with China as board pieces.