IMF and Milei – partners in Argentina’s neoliberal autocracy
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Article summary
- IMF approves new $20 billion 2025 loan for Argentina despite disastrous 2018 programme
- New programme supports largest fiscal adjustment in country’s history
- IMF complicit in human rights impacts of the government’s autocratic neoliberal policies
After seven years, and 20 agreements since 1956, under IMF programmes, Argentina remains in an economic crisis. Following a brief period without its presence, the IMF came back in 2018 in the midst of a crisis that has lasted ever since. President Javier Milei’s current orthodox government is implementing a regressive austerity plan that is at oddswith international human rights law while the IMF reinforces its complicity.
Milei’s government took office in December 2023, campaigning on a promise of the largest fiscal adjustment in the country’s history. This economic policy proposal is directly at odds with the rule of law. With a small minority of legislators in Congress, with no governors or mayors, Milei has governed based on executive decrees, without further discussion and parliamentary approval. In fact, there is no approved national budget for 2025. The reason given by the minister of finance for circumventing the constitution is that the government did not go to Congress as per the law on national borrowing because they didn’t have the votes to get it passed.
Orthodox economic policy has harmful effects on the ability of the government to comply with its legally binding international human rights obligations. In 2024, public spending fell by 25 per cent, with one third explained by cuts in the pension system, provoking persistent protests by retirees, who have been harshly repressed. Even journalists covering the events have been repressed by the police. The adjustment has meant the interruption of programmes aimed at early childhood, victims of gender violence, the early warning system for extreme weather events and the provision of medicines for prolonged treatment, among other dramatic examples. Education, science and technology systems have the lowest budgets in two decades.
The government celebrates having fiscal surplus because it hides in the public accounts the growth of accrued interest associated with the expansion of public debt. Milei’s government is using fiscal adjustment as an anchor to lower inflation. To achieve this, it is also using two other anchors: a fall in real wages – and the exchange rate. Despite the IMF’s evaluation of the success of the programme, the anchor requires an increasing flow of incoming dollars. And these dollars have dried up because of persistent debt interest payments. In that context, the IMF reappears to add a dollar flow to extend Milei’s austerity plan for some time.
The harmful IMF (self-perceived) “bailout”
Argentina has a long and harmful history with the IMF. Since it signed a Stand By Agreement in 2018, the country has been caught in a downward spiral of recession and inflation (see Observer Summer 2018). As acknowledged by then US Executive Director at the IMF Mauricio Claver-Carone, the agreement aimed to support then President Mauricio Macri. The IMF lent some $44.5 billion, financing capital flight for an equivalent amount, until the government lost the elections. In the midst of an exchange rate and financial crisis, Argentina went into partial default in 2019.
In 2022 it signed a new extended facility agreement, to finance the repayment of the 2018 agreement (see ObserverSpring 2022), under commitments to make a fiscal adjustment, reduce monetary issuance and accumulate reserves. Despite the critical review by its own Independent Evaluation Office, the IMF did not act on it. It did not grant relief, on the contrary, it overcharged the country, through its counter-productive and illegal surcharges policy (see ObserverSummer 2024; Inside the Institutions, What are IMF surcharges?), for the amount borrowed and the repayment terms. After seven years under IMF programme-related surveillance, the country did not regain access to capital markets, making the possibility of repayment to the organisation not credible.
In 2025, the IMF deepened its bet with Argentina, financing the adjustment of an ultra-orthodox government, issuing a loan of $20 billion. Convinced that this is a painful but necessary task, the Fund omits any consideration of, and indeed fails to measure, the social effects of these policies. Apropos of US Treasury Secretary Scott Bessent’s statement that the IMF must refocus on its core missions, the repeated failure of IMF’s involvement in Argentina and the US’ strong support for the current programme highlight the impact of the institution’s unequal distribution of power and democratic deficit on the Fund’s ability to promote macroeconomic stability. The loan was reinforced by the promises of an additional $22 billion from the World Bank and the Inter-American Development Bank.
The IMF Managing Director, Kristalina Georgieva, went so far as to express the need to support the government in 2025’s legislative elections, although she later sought to retract her statement. With these funds comes the pressure to advance in regressive labour and social security reforms, together with privatisations of public companies. None of the requirements are associated with improving the living conditions or wellbeing of the population. Unfortunately, this is nothing new, as the IMF continues to promote austerity policies widely, diminishing human rights as it goes.
Beyond that, and under the Fund’s own terms, the central question is which private creditor will lend to Argentina, if the IMF is considered as a privileged creditor, and has a balance of almost $60 billion in its favour. The return to the capital market only seems possible under conditions that would be disastrous for the country. In order to overcome these difficulties, the expectation is that the growth of primary exports – agriculture, mining and hydrocarbons in unconventional deposits – will help to pay the debt. These sectors generate few decent jobs and have severe environmental impacts. It does not seem to be a way out that will improve the lives of the Argentine people. Perhaps for this reason, Milei’s government has become increasingly repressive. The IMF, knowing this, decides to go along. In law this is called complicity.
