The IMF bashes the IMF over Argentina

INFLATION IN ARGENTINAIMFIMF had intensified, the lamented. The cost of living had increased by some 50% over the course of the year. “The most important source of inflation”, the fund explained, “was government-deficit spending, financed by borrowing from the central bank.” The deficit, in turn, reflected excessive wage demands and the failure of the country’s utilities to raise prices in line with costs. The year was 1958. At the end of it, Argentina turned to the fund for its first “standby arrangement”, a line of credit accompanied by a plan to stabilise the economy.Sixty years later, in June 2018, Argentina was back for its 21st arrangement: a $50bn loan, later increased to $57bn, backed by the government’s promises to cut the budget deficit and strengthen the central bank in the hope of quelling inflation and stabilising the peso. The loan was the largest in the ’s history. It has left Argentina so in hock to the fund that the country will need a new longer-term loan to help it repay its existing one. Despite its size, the rescue failed to save Argentina from default and despair. It has also left the fund heavily exposed to a single country when many other emerging economies may soon need its help.