How was the decisive session of the IMF Board that approved the Argentine case

October 28, 2018 - By Joseph Taylor

The 24 directors were arriving punctually at 9.30, Washington time (10.30 in Argentina), the third floor of the International Monetary Fund building, on Avenue 19, a few blocks from the White House. They usually meet on the 12th floor, with a better view, but the room is being renovated today.

The session was important: would go to approve the largest loan in the history of the agency for some 53,600 million dollars for Argentina. According to Clarín, the meeting went through the usual lanes and the process was quick. In an hour and a half the issue had been sealed unanimously, when a “complicated” meeting could take twice as long. And that all the directors had space to talk for a few minutes.

The managing director, Christine Lagarde, chaired the meeting and was the one who introduced the topic. He made a summary of why the program agreed in June had not worked and explained the measures that Argentina took to review the new agreement. Lagarde said that, given the effort that the Government had made, it merited the Fund’s additional plan to help resolve the crisis of confidence.

Lagarde then opened the debate. The 24 directors who represent all the member countries of the organization (some lead a group of countries) spoke for 3 or 4 minutes because they all joined the discussion of the historic program. They expounded or posed questions to the French and Roberto Cardarelli, the technician who had written the technical report and who follows the Argentine case. Together with Cardarelli sat a representative of the Strategy Policy Review, a central department of the Fund whose task is to ensure that the agency’s policies are applied homogeneously to all countries.

According to Clarín, the support was unanimous. Although decisions on the board are adopted by consensus, there were no abstentions either. In general, the monetary and exchange policy proposed by the Government was welcome. It was important for the “climate” of the meeting that the 2019 budget had been approved by the Chamber of Deputies the previous day, because they considered that the procedure in the Senate would be simpler.

Several representatives asked about how much political commitment is beyond the Government for these new measures that are being implemented. Other questions revolved around the possibilities for Argentina to resume access to private financing markets. Cardarelli and Lagarde responded.

There was also talk of the risks of the international context changing and the United States, for example, increasing its rate much more. It was pointed out that in this sense Argentina is protected because it does not need to access the international financial market until the end of 2019, a period in which the adjustment can be implemented without problems.

After this round of exhibitions, questions and answers, Lagarde concluded the debate. On November 8, Cardarelli’s team will travel to Argentina to follow the progress of the program. If it follows everything as agreed, it will inform the board once again so that it approves the December 7,700 million disbursement scheduled for December.

After closing the historic Argentine case, the directors retired to an intermediate room to then continue analyzing the situation of other countries, such as the Asian kingdom of Bhutan.

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