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ECONOMY-ARGENTINA:
The Social Debt
Will Have to Wait
Marcela
Valente
BUENOS AIRES, (IPS) -
Argentina's announcement that it
will pay off the International
Monetary Fund (IMF) earlier than
scheduled, following Brazil's
lead, was seen as a historic
move. But some analysts doubt
that the enormous financial
effort will actually lead to
progress in resolving the
country's severe social
problems.
Opponents on both the right and
the left criticised, although on
the basis of different
arguments, the decision
announced Thursday by the
centre-left government of Néstor
Kirchner.
Earlier this year, Argentina
already completed a debt
restructuring programme in which
private holders of Treasury
bonds lost a large proportion of
their investment.
Economic analysts are divided in
their opinions on the latest
move, with some expressing
doubts as to the economic and
social impact of the unexpected
decision, and others stressing
the fact that the Kirchner
administration will thus escape
the conditions imposed by the
multilateral lender.
Economist Claudio Lozano, a
lawmaker with the leftist Fuerza
Porteña alliance and adviser to
the Central de Trabajadores
Argentinos trade union
confederation, told IPS that
despite the apparently
progressive nature of the move,
the spirit of the decision
reached by both Argentina and
Brazil this week is actually
much more in line with the
demands of the IMF than what the
governments are trying to make
it look like.
While some social organisations
that support the Kirchner
administration applauded the
decision to pay off the 9.8
billion dollars that Argentina
owes the IMF, groups opposed to
the government said the decision
had the go-ahead from the
multilateral financial
institution and transnational
corporations.
"The announcement shows that we
are right when we argue that
Argentina has economic resources
that could be used to pay off
the internal social debt," said
a communiqué released Friday by
the "Autoconvocatoria No al ALCA"
(No to the FTAA), an umbrella
group of political, social,
religious and human rights
organisations opposed to the
U.S.-sponsored Free Trade Area
of the Americas (FTAA).
The Darío Santillán Popular
Front, which groups dozens of
organisations of unemployed
workers, also criticised
Kirchner's plan. "Despite the
progressive rhetoric, the debt
is paid off with the hunger of
the people," the Front said in a
statement Friday.
But economist Alejandro Vanoli,
one of the authors of the Plan
Fénix - a programme of reforms
proposed by a group of prominent
University of Buenos Aires
academics - described the
decision as "positive, because
it brings to a close a
three-decade cycle in which the
IMF played an important role in
terms of sharing responsibility
for the country's indebtedness."
But the economist also warned
that it is necessary "to dig
ourselves out of the social debt
as well, which is as important
as the foreign debt."
When he made his announcement
Thursday, Kirchner thanked
presidents Luiz Inácio Lula da
Silva of Brazil and Hugo Chávez
of Venezuela for supporting the
decision, thus revealing some
degree of coordination of
policies on the issue in the
Mercosur (Southern Common
Market) trade bloc, also made up
of Paraguay and Uruguay.
Last Tuesday, the Brazilian
government made its own
announcement that it planned to
pay off, by the end of the year,
the 15.5 billion dollars it owes
the IMF, by drawing on its
foreign reserves. Argentina will
do the same.
But by contrast to the heavily
attended press conference held
in Argentina, the Brazilian
announcement was made quietly,
through a statement by the
Finance Ministry, which said
that the decision was reached
with the aim of strengthening
the country's macroeconomic
fundamentals.
Only Central Bank President
Henrique Meirelles publicly
celebrated the "historic
moment."
Former Brazilian Central Bank
director Carlos Thadeu de
Freitas told IPS Friday that "it
was a wise decision, an
efficient way to use the
reserves and reduce the debt."
He also said that "paying off
the IMF leaves us entirely free
of the conditions imposed by an
accord (with the multilateral
lender) and generates a strong
image among foreign investors."
Kichner said the decision to pay
off the IMF "will allow us to
build a more just future, with
greater flexibility in the
design and implementation of
economic policies, while freeing
up resources to better tackle
the struggle for growth,
employment and social
inclusion."
The debt to the IMF "was a
constant vehicle for meddling,
because it is subject to
periodic reviews and was the
source of requirements that
contradicted each other and were
opposed to the objective of
sustainable development," said
the president, stating that
paying off the debt would allow
the country to save 1.1 billion
dollars a year in interest
payments up to 2008, which was
the original deadline.
Nevertheless, there are many
sectors that are not convinced
by these arguments. Social
movements and progressive
economists are sceptical that
the decision to pay off the IMF
will translate into abandoning
all of its economic policy
recommendations.
"In the 1990s they told us that
after economic growth had been
achieved, the wealth would
trickle down, and now they're
telling us that after we get out
from under the IMF, there will
be better distribution of
income, but we know it isn't
true," Laura Cibelli of the
Darío Santillán Popular Front
told IPS.
This organisation of "piqueteros"
- unemployed workers who protest
by mounting roadblocks or "piquetes"
- points out that according to
official statistics, there are
almost eight million Argentine
children living in poverty, of
whom three and a half million
are undernourished. There are
also 1.8 million unemployed
heads of households living on
meagre state subsidies.
Nevertheless, the budget
guidelines for 2006 that the
executive branch submitted to
Congress do not foresee any
substantial changes to confront
this dramatic situation, said
Cibelli.
But according to an article
published Friday in the Buenos
Aires newspaper Página 12,
Vanoli stated that Central Bank
reserves are never used to
attend to social demands, which
is why "one decision should not
necessarily be judged in
accordance with the other."
"This decision is a historical
landmark," declared the Plan
Fénix expert, "and the next
challenge is to pay off another
debt, the social debt, because
if the political will exists it
can be done, and it is being
demonstrated that it does
exist."
Lozano responded to this kind of
optimism by commenting that
"placing priority on making
payments to the multilateral
lending organisations and paying
off the IMF debt, without
demanding any compensation for
their shared responsibility in
the process of indebtedness, is
a strategy that fully complies
with the demands of the IMF
itself, and in fact, the
announcement was celebrated by
its directors."
He also questioned whether the
decision would really give the
government greater freedom when
it comes to confronting problems
like inequality, unemployment,
poverty and extreme poverty. And
in his view, this will most
likely not be the case, at least
in the medium term.
Minutes before Kirchner
announced the decision at a
ceremony in the presidential
palace attended by numerous
guests, Lozano put forward a
motion in Congress for a
discussion on how to redirect
the funds allocated in the 2006
budget for payments to the IMF
totalling 5.08 billion dollars.
Given the decision for the early
settlement of the IMF debt, the
legislator stressed to his
colleagues that the money
earmarked for this purpose in
the federal budget would be left
unaccounted for if the decision
were made to pay off the debt
with reserve funds, and that now
is the time to discuss how it
will be spent instead.
The chairman of the lower house
budget committee, Carlos Snopek,
clarified that this money would
not be used for attending to
social problems, but would
instead be used to start up a
fund that the government wants
to create to guarantee the
payment of debts to private
creditors.
The piqueteros emphasised that
the draft 2006 budget, which had
already passed through one house
of Congress the previous day,
just as the debt payment
announcement was about to be
made, does not establish
increases in pensions or
salaries for public employees,
and grants priority to
accumulating surpluses to pay
off debt commitments "that the
people did not contract."
Lozano also questioned why the
government has chosen to use
freely available reserves
exclusively to pay off the debt
to the IMF without consulting
other branches of the state,
which could recommend that the
funds be used for other
purposes, more closely related
to still pending internal social
needs. |
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