We are concerned about the dissemination of false information by the IMF. Even more troubling is the Executive Board’s continued endorsement of a government program that is exacerbating the living conditions of the most vulnerable sectors. Various human rights organizations and civil society groups have sent a letter.
Following the eighth technical review of the agreement with Argentina, the International Monetary Fund (IMF) issued a statement praising the national government’s economic policy, highlighting “significant efforts to scale up social support for vulnerable young mothers and children and protect the purchasing power of pensions.”
In anticipation of the IMF’s Executive Board meeting, where the approval of a new disbursement of the external debt agreement is to be finalized, various human rights organizations and civil society groups sent a letter expressing concern about the serious social consequences of the austerity plan implemented by the Argentine government, in opposition to its statement on May 13. As part of the submission, we requested a meeting with the organization to provide our input and access to the analyses the entity conducted to assess the impacts of economic reforms on gender equality and the environment.
Ref.: Eighth Review of Argentina’s Extended Fund Facility
Buenos Aires, May 28, 2024
To the Executive Board of the International Monetary Fund
On May 13th, the International Monetary Fund (IMF) announced that its technical staff and Argentine authorities reached an agreement on the eighth review of the Extended Fund Facility, which would enable the corresponding disbursement of funds. It accompanied the announcement with a statement praising the policies implemented by the national government. The entity also claimed that the results were “better than expected” and that the targets were “exceeded,” mainly considering the fiscal surplus of the last quarter and the decline in inflation. Regarding the unavoidable social costs incurred to achieve these results, the statement maintains that “the authorities have made significant efforts to scale up social support for vulnerable young mothers and children and protect the purchasing power of pensions.”
This statement starkly contradicts the social reality. Not only have there been no “significant efforts” to protect this population, but the burden of the adjustment has disproportionately fallen on retirees, women, and children, due to explicit decisions by the national government.
To start, out of 43 national care policies primarily targeting women, children, and older adults, 21 were abolished, 15 are on hold, and only seven remain active. All initiatives aimed at expanding care infrastructure, such as schools and nursing homes, are stalled, exacerbating the caregiving burden at home. Additionally, food assistance to approximately 44,000 community kitchens was halted. UNICEF has sounded the alarm, reporting a 75% real-term decline in the national budget allocated to childhood. If current trends persist, childhood and adolescent monetary poverty is projected to hit 70% in the first quarter of 2024, with indigence reaching 34%.
The acceleration in inflation during the initial months of Milei’s administration particularly impacted the overall basic basket, pivotal for gauging the threshold income to escape poverty. In April 2024, it amounted to ARS 268,012 for an adult (equivalent to USD 299 at the official exchange rate) and ARS 828,158 for a four-member household (equivalent to USD 923 at the official exchange rate). Comparatively, the minimum wage for that month was ARS 221,052 (equivalent to USD 247 at the official exchange rate), representing 82% of the poverty basket for an adult and a mere 27% for a four-member household. As for minimum pensions, predominantly availed by women, disbursements totaled ARS 171,283 (equivalent to USD 191 at the official exchange rate), barely 64% of the basic basket for an adult. Minimum pensions experienced a 20% devaluation in the initial three months of governance.
The data shows that for every ARS 100 of adjustment, around ARS 37 corresponded to cuts in pensions. Moreover, far from shielding retirees and women from the impact of adjustment, the government incorporated into the latest iteration of the bill “Bases and Starting Points for the Freedom of Argentines”—under congressional deliberation during the IMF assessment—the elimination of the pension debt repayment law, No. 27,705. If approved, 240,000 women currently eligible for pensions will be deprived of this opportunity.
Far from having made “significant efforts” to assist women, children, and retirees, these groups have been the most affected by the harsh austerity measures imposed during the first five months of this administration.
At the same time, other government initiatives raise concerns due to their potential impact on human rights and the environment.
The “Bases and Starting Points for the Freedom of Argentines” bill aims to lessen the tax burden on the wealthiest by reducing the Personal Assets tax, while raising taxes for lower-income individuals through increased monotax rates for lower categories. This is coupled with a new proposal for tax amnesty on undeclared foreign assets, favoring the affluent who previously evaded taxes. These measures starkly contrast with the program’s stated focus on enhancing “the progressivity of the tax system.”
In the same bill, there’s a push to bolster the Incentive Regime for Large Investments (RIGI)—outlined in Article 162 and subsequent sections of the proposal. This scheme grants tax, customs, and currency benefits over 30 years to large domestic and foreign investors, permitting unrestricted currency access without the need to fulfill any requirements or employ Argentine workers. Of particular concern is the omission of the socio-environmental aspect given that, under this regime, projects such as forestry, hydrocarbon, and mining ventures linked to copper and lithium, among others, stand to gain significant advantages. Notably absent are any stipulations, penalties, or considerations for potential environmental liabilities associated with these endeavors. This omission blatantly contradicts Argentina’s climate commitments under the ratified Paris Agreement (Law 27,270). This initiative forms part of structural reforms “to address obstacles to productivity, private investment, and formal employment,” as one of the “key understandings” referred to in the IMF’s statement.
Finally, the statement omits that the economic policy results were achieved through unsustainable measures in the medium term. In particular, it praises the Central Bank’s accumulation of reserves but fails to consider that this occurs at the expense of a collapse in imports—due to the recession—and the accumulation of debt for the purchases actually made. It also praises the fiscal surplus, without considering that it has been achieved by completely halting public works and postponing payments to CAMMESA to settle its debt with energy generators, among other decisions that are not sustainable over time.
We are concerned that the organization issues public statements with false information. Moreover, the IMF Executive Board continues to support a government program that has resulted in worsening living conditions for the most vulnerable sectors. It is worth noting that the IMF has an obligation to comply with the United Nations Charter, as it is a body of this organization, which includes among its principles the protection of human rights.
Consequently, we request that the Executive Board kindly:
1. Grant us a meeting to provide information and offer our perspective on the situation in Argentina.
2. Provide us with the impact analyses of the reforms evaluated in the statement on gender equality and the environment conducted by the IMF.
Centro de Estudios Legales y Sociales (CELS)
Espacio de Trabajo Fiscal para la Equidad (ETFE)
Fundación Ambiente y Recursos Naturales (FARN)
Centro de Políticas Públicas para el Socialismo (CEPPAS)
Coordinadora de Abogadxs de Interés Público (CAIP)
Asociación Civil por la Igualdad y la Justicia (ACIJ)
Red Latinoamericana por Justicia Económica y Social (Latindadd)
Fundación SES
Economía Feminista – Ecofeminita
Instituto Argentino para el Desarrollo Económico (IADE)
Francisco J Cantamutto (Southern Economic and Social Research Institute – National University of the South – CONICET)
Juan Pablo Bohoslavsky (CONICET – National University of Río Negro)
Martin Mangas (National University General Sarmiento)
Dr. Arnaud Iribarne (University of Buenos Aires)
Candelaria Botto (University of Buenos Aires)
Marisa Duarte (University of Buenos Aires)
Verónica Grondona (Cultural Center of Cooperation)