Leon M. Bodevin

April 22, 2002

Professor Cleaver

 

“IMF Agreement on Argentina Austerity is Unworkable, Many Experts Contend,” L. Schuster, S. Karene Witcher, and A. Pine, Wall Street Journal, September 27, 1984

Main Point:

Many economic experts and Argentine officials say the IMF agreement announced last Tuesday is unworkable.

Summary:

Argentine officials say that the Argentine people are not ready for the austerity measures the IMF plan calls for. The plan calls for a devaluation of the currency, a slowdown of wage increases, an increase in taxes, and a cutting of the money supply to cut inflation.  Many believe that even the Argentine President does not fully back the plan.

Many New York bankers feel that foreign creditors may refuse to finance Argentina’s $45 billion debt. This would hold up the $1.42 billion loan promised by the IMF, forcing the Argentine government to ask for emergency loans from the U.S. Treasury.

Argentina owes almost $1 billion in interest arrears, which banks want by this Sunday so they can include the payments in their 3^rd quarter earnings reports. Argentina has not announced how much of this $1 billion it will pay by Sunday.

President Alfonsin faces an uphill battle in trying to get the Argentine people to accept the IMF plan. Though no one speaks of a military coup, many believe there is enough instability and “creeping anarchy” that the administration may lose its grip on the country.