Read on Twitter
This report recently launched by Argentina’s Central Bank (BCRA) evidences in detail how the Macri administration (2015-19) and the IMF have contributed towards and fuelled the sovereign debt crisis currently facing the country, respectively.
http://www.bcra.gov.ar/Noticias/publicacion-de-informe-mercado-cambios-deuda-2015-2019.asp
http://www.bcra.gov.ar/Noticias/publicacion-de-informe-mercado-cambios-deuda-2015-2019.asp
Macri’s administration promoted a paradigm shift towards so-called ‘deregulation’ – that is, a peculiar type of regulation benefiting the most powerful actors.
The exchange rate, monetary and foreign indebtedness policies adopted by the government resulted in a US$86bn capital flight from Argentina from 2015-19.
These policies caused an economic crisis in Argentina and resulted in less growth and investment, higher unemployment, and increased inequality.
The external asset formation by residents of the country during the period was promoted by only a few economic actors. A small group of 100 actors purchased around US$25bn. In turn, capital flight by the 10 largest foreign currency purchasers reached US$8bn.
While around 6.7m people bought foreign currency during this period, the number of companies reached 85k. External asset formation by the top 1% of the net buyer corporations reached US$41bn. As regards human beings, the top 1% of buyers accumulated US$16bn during this period.
The first phase of Macri’s tenure, from late 2015 to early 2018, was marked by higher levels of capital inflows. Yet from every US$10 that entered Argentina during this period, 8 were originated in foreign indebtedness or speculative capital flows.
Foreign exchange income in both public and private debt and speculative portfolio investments reached US$100bn during this period.
With the reversal of capital flows in early 2018, the authorities decided to turn to the IMF, which disbursed a record loan of US$44.5bn. These resources were significantly used to keep financing capital flight until the presidential election in late 2019.
From 2015-19, capital flight levels tripled. Even during the first stage of the capital inflow boom, external asset formation by residents reached US$41bn. During the accelerated stage of capital outflows which started in May 2018, these figures reached US$45bn.
These figures show something the literature on sovereign debt does not seem to have explained enough - ILOLR moral hazard. I am currently writing on this point. I am happy to hear your literature suggestions if you have any!
