Home » Guzmán is back: criticism of the IMF and a blow to Massa? | Three months after his resignation, the former minister reappeared with a speech at the UN

Guzmán is back: criticism of the IMF and a blow to Massa? | Three months after his resignation, the former minister reappeared with a speech at the UN

by archyde

Three months after his resounding departure from the Ministry of Economy -which generated a strong political and economic shock in the Frente de Todos and the numbers of the country-, Martín Guzmán reappeared with a speech with a lot of gestures in an economic panel of the United Nations Organization (UN). Since that event, which took place in New York, the former official criticized the policy of surcharges applied by the International Monetary Fund (IMF), and in an indirect message, he seemed to speak to the current Minister of the Economy, Sergio Massa, by saying that facing “a strict fiscal consolidation based on typical austerity policies brings adverse effects that can be economically and socially destabilizing.” In parallel, he complained that Congress is still not dealing with the Unexpected Income project, which he understands is useful for redistributing resources in the crisis.

These statements are part of a scenario in which Massa comes in a process of ordering state spending. And Guzmán’s message also goes back to the fact that during his administration he had been questioned by different sectors of the Frente de Todos for the application of austerity policies in pursuit of meeting the goals committed to with the IMF.

The former Minister of Economy was invited by the United Nations Organization to open and speak at the panel on “World Economic Situation and Perspectives 2023”. He was given the opportunity to give the leading speech, entitled “Addressing the macroeconomic and debt crises after 4 decades of poorly managed globalization, Covid-19 and war.

In the panel, Guzmán began by talking about the effects of the war in Ukraine, to touch on issues of the local sphere at the same time. “In Argentina, when I was Minister of Economy, we presented a bill on Unexpected Income to attack the unequal impact generated by the war in Ukraine. Other countries have adopted similar initiatives. The bill has not yet been dealt with by Congress,” he said. . In Guzmán’s environment they see this point as central because they understand that, if approved, it could serve to redistribute among the sectors hardest hit by the crisis. That project, of his authorship, is stuck in Parliament without a certain date for debate or intentions to do so.

Along these lines, he assured that “today the main concern of the central banks and finance ministers of the G20 countries is the inflation“, adding that “the wave of contraction of monetary policies that we are experiencing is going to aggravate social and political tensions throughout the world.”

Adjustment and surcharge

Regarding the ordering of the accounts, he seemed to talk about the global ones but also about Argentina. “There are going to be cases of countries that carry out sovereign debt restructuring processes that will still have to carry out fiscal consolidation, because if we are in a situation in which there is no financing and there is a primary fiscal deficit, fiscal consolidation continues to be necessary, but it has to be with growth, and in that case it is essential to define priorities for the use of State resources,” he said. And he slipped something that could also be read as a criticism of Kichnerism that did not support the negotiation with the IMF: “The difficult thing in the debt restructuring process -he said- is to create national common sense, social and political support for a proposal that is effective to restore debt sustainability when necessary.

Likewise, he questioned the IMF for the policy of surcharges, which he considered “meaningless wherever you look at it. It is regressive and increases global instability.” And he recalled that “in 2021, in September when I was still a minister, we put this discussion on the table of international forums and there was a formal meeting of the IMF Board in which more than 60 percent of the votes of the members were in favor to revise the surcharge policy in some way, but six board chairs were against it, the main opposition coming from the US Treasury”. On this last point, it is worth saying that the assertion would have been complex with Guzmán in office and it is simpler from the outside: the Treasury is the Ministry of Economy of the United States and political validator of agreements with countries, almost the owner of the IMF. In other words, that criticism would have been impossible with Guzmán negotiating.

The former minister concluded that “the arguments that are put forward for not modifying the surcharge policy do not make sense. One of them has to do with moral hazard. It is argued that surcharges are so that countries do not have incentives to borrow too much. of the IMF or to have indebtedness relations with the organization that last a long time… but what country wants to stay in the bottom for a long time? I, for example, wish that Argentina had never been indebted to the IMF”. He also added that “when we assumed the government in 2019, my proposal to the President was not to take a single additional dollar of debt with the IMF, when 11 billion dollars of the SBA loan program agreed in 2018 had yet to be disbursed, and that was what was done.”

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