Lenders drive Argentina into a debt default

Argentina is expected to formally default today after the 30-day grace period on a bond payment expires.

Commenting on the default, Sarah-Jayne Clifton, Director of Jubilee Debt Campaign said:

“Argentina is right to demand a deep debt restructuring and to default if lenders do not accept a deal. Reckless lending at high interest rates helped to create the current crisis, so lenders and speculators should share in the costs.

“Argentina’s debt should have been restructured in 2018 when this crisis began. IMF loans in 2018 bailed out speculators and funded huge capital flight with no benefit to ordinary people in Argentina. The IMF now rightly says the debt is unsustainable, but it should have done so since 2018. The IMF should bring in clear guidelines so that its loans are no longer used to bail out reckless lenders.”

Jubilee Debt Campaign is today releasing a background briefing on the events leading up to Argentina’s current crisis. The briefing shows how the current crisis is rooted in high interest loans given to pay huge profits to vulture funds in 2016. The lending boom from 2016 to 2018 was followed by the largest IMF loan programme in history, which effectively paid off private lenders and enabled large-scale capital flight out of the country, both of which broke IMF rules.

Even before the coronavirus crisis began, Argentina’s external government debt payments reached 29% of government revenue in 2019, and 53% of exports.

People carrying banner on march
A protest against the IMF in Buenos Aires in 2018. The banner reads “Down with Austerity, Macri, IMF, the Governors. No to the Payment of the Debt.” (Photo credit Dan Ozarow)

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