Argentina update

A default on their IMF loan has been averted for now.

There are two typical complaints about the way the IMF and the other international lenders function. The first is that much of what the IMF and the other international lenders do is decided on in secret. The second is that loans they make are often conditioned on the implementation of policies that hurt local economies. "The IMF generally says it wants countries to make dramatic cuts in social spending and to raise taxes in order to balance the budget and make the government more credit worthy, Rep. Mark Kirk, R-Ill., said. "Many times, especially on raising taxes, its strategy triggers a recession that then make the country less able to pay its debt." Kirk is an expert on the issue of international lending institutions, having dealt with the issue while a congressional aide, at the U.S. State Department and as a staff member at the World Bank. Now, as a member of the House Appropriations Subcommittee on Foreign Operations, he is waging an effort in support of reform. "It is not a policy option to allow Argentina to fail," Kirk said. "They had had a pro-growth agenda of low taxes, open markets and pegging the currency to the dollar" under the previous government but, thanks to domestic and international pressures coming at least in part from the IMF, the current government has been advocating policies that produce downturns in the economy rather than growth. For now, Argentina continues in the driver's seat because it is, in the words of the old saw, "too big to fail." The IMF has continued to make loans to South America's second largest economy, which owes an estimated $100 billion to private creditors, so that it can maintain its payments on loans already outstanding. If it defaulted, the influx of cash from the IMF and other international institutions would end, forcing the government in Buenos Aires to suspend the repayment of loans already outstanding, creating an international financial crisis that might have forced U.S. politicians to talk seriously of IMF and World Bank reform. The deal reached Tuesday puts that off.

  UPI article

Which really, isn't a good thing.

....but hey, do what you want....you will anyway.