In Argentina, however, instead of favoring economic recovery, Macri used new IMF debt to pay old debts.
At an international event held in Washington DC On Friday Sergio Massa, a key ally of presidential front-runner Alberto Fernandez, warned that the International Monetary Fund (IMF) should give Argentina time to revive economic growth to be able to pay off its debts.
"The responsibility that the IMF has today is to accompany Argentina in a 10-15 year project," Massa said and added that the Fund also had a responsibility to help countries build up strong economies, warning that if the country was not given that support, it may not be able to repay its creditors.
"The dead don't pay... Argentina needs to grow in order to pay," he said.
Argentina faces a debt crunch after a market crash in August, which forced right-wing President Mauricio Macri to roll out plans to delay payments on around US$100 billon of debt. Over US$57 billion of such amount comes from an IMF stand-by credit facility.
The IMF may only lend if debt is sustainable in the medium term. If not, it should back restructuring or concessional lending. Yet it doesn’t define what sustainable is for upper-middle and high-income countries like Argentina, as @dropthedebt point out. https://t.co/Pvxgw8R49Q— Miriam Brett (@MiriamBrett) October 4, 2019
Massa, a centrist politician who has helped Alberto Fernandez appeal to a broader voter base, is expected to play an important government role if Fernandez wins the general election later this month.
On Wednesday Argentine economists announced a deeper recession, for the Gross Domestic Product (GDP) was forecast to shrink 2.9% this year.
In this context, instead of favoring economic recovery, Macri used part of the first IMF disbursement, some US$7.2 billion, to pay previous maturities.
In other words Argentina is another example of what usually happens through right-wing governments, new debts were used to pay old debts.