Argentina Can’t Afford to Delay Economic Reforms

Argentina is in a familiar place, buried in debt, unloved in the financial markets and at the mercy of the International Monetary Fund — or is it the other way around? When a country owes $45 billion, the balance due on the IMF’s biggest rescue loan ever in 2018, it’s not so much in hock to its creditor as joined at the hip. What’s worse, after nine sovereign defaults, 21 previous IMF bailouts, and six straight decades of 200% annual inflation, never mind the pandemic that already has claimed nearly 57,000 lives, Argentina’s predicament surprises no one.

The IMF and Argentina are currently arguing over the terms of an Extended Debt Facility to resolve the country’s funding crisis, and what reforms it will undertake in return. The deep travails of the continent’s serial profligate and the high stakes for the IMF have fed a consensus that any deal will have to wait until after Argentina’s midterm elections in October. True, committing to a new IMF agreement and the fiscal retrenchment any deal would entail is unlikely to help President Alberto Fernandez at the polls, where his slim ruling Peronist majority — and hence the IMF’s payback — hangs in the balance. Yet here’s the rub: Shelving salutary reforms for partisan advantage until after the election may be the bigger peril, threatening not just to derail Argentina’s return to sustainable growth, but also to tar Fernandez and his allies for squandering an opportunity to set the country right.

Argentina’s debt debacles have many makers. After acknowledging yet another default last year, it reached an agreement with private lenders to reschedule $65 billion in overdue debt, itself part of unfinished business from the quarrelsome 2000s. Economy Minister Martin Guzman led last year’s talks and now is back in the trenches with the IMF, whose 2018 rescue loan now looks in need of rescue.