Critical thinking. The IMF and the history of subordination in the Latin American and Caribbean region – Latin American Summary

By Julio Gambina*, Latin American Summary, May 14, 2022.

Argentina is at the center of attention and debate due to the agreement recently signed with the IMF and which is projected towards 2034.

An agreement that attempts to legalize the origin of a questionable loan from various angles (45 billion dollars disbursed) and granted in 2018 with the deliberate sponsorship of the US (Trump government) and its relative weight in the decision-making of the organism.

With this loan, Argentina is today the main debtor of the IMF and has just signed a fiscal and monetary adjustment program in a framework of high inflation and deterioration of the living conditions of the impoverished majority. A classic in the logic of the IMF.

In recent history we can find other paradigmatic cases, such as that of Bolivia in 2019, a country receiving an IMF loan for 327 million dollars, granted to an illegitimate government (emerged from a coup) and not used, which was returned by the current government with updates for more than 19 million dollars, and interest and commissions for 4.7 million dollars; totaling a cost of almost 25 million dollars. It is also worth recovering the historic Ecuadorian popular resistance in 2019 in the face of the demands signed between the IMF and the Ecuadorian government, which had an impact on the living conditions of the population.

These are two very concrete examples that associate the IMF with the logic of capitalist domination. and, therefore, the extraction of wealth from our societies. The concrete thing is every time the IMF intervenes, the meaning is the reactivation of the capitalist order to the detriment of popular and social rights. There is a mixed record of reactionary IMF interventions throughout the region. These days there are agreements with Chile, Colombia and Costa Rica.

It is worth remembering that the IMF is a governing body of the world financial system within the framework of the emerging economic order after the Second World War. Indeed, the US, the ruling power of the world system, exercises hegemony in international organizations, the IMF and the World Bank, with which they act in tune with the logic of economic policy designed from Washington. It was in the 1990s that the so-called “Washington Consensus” (headquarters of the IMF, the World Bank and the US government) was defined for the Latin American and Caribbean region and with it the accelerated process of liberalization of the economy, with to the free movement of international capital; privatization of public companies; the disarmament of the import substitution strategy.

Strictly speaking, a process started in the seventies of the last century and consolidated in the last decade of the twentieth century. The IMF is at the center of the management of the “debt system”, a mechanism of domination and subordination of our peoples and countries to the logic of accumulation of the most concentrated capital in the world. It is a logic based on the articulated dynamics of transnational corporations, including banking and the financial market, the main states of world capitalism and international organizations.

Resistance to the IMF and debt

The debt constitutes a mechanism for strengthening the dependency of our countries, which motivates us to recover the processes of resistance and confrontation against external creditors and the IMF.

It is worth recalling the history of the Latin American and Caribbean debt, as a mechanism for the subordination of our peoples and societies to the logic of world capitalism, recreated under the conditions defined by big capital in times of globalization and expansion of finance and speculation.

The IMF intervened in times of import substitution industrialization, between the 50s and 70s of the last century and was an essential instrument to contribute to the change of model towards economic liberalization in the 80s/90s of the 20th century.

Therefore, among the antecedents, the non-payment of the Mexican debt in 1982 must be recorded, giving rise to the “debt crisis”, which in the Latin American and Caribbean region marked the end of a productive and development model deployed for half a century between the 20/30s of the last century and the neoliberal restructuring of the 70s/80s that consolidated the Washington Consensus.

Incidentally, in that decade of the 80s there was a setback that ECLAC defined as a “lost decade”, aggravating the structural problems of the socio-economic organization throughout the region, with an increase in inequality, concentration of income and wealth. and expansion of unemployment, poverty, exploitation and plunder.

In response to the aggression of the creditors under the management of the IMF, the proposal that emerged from Havana in 1985 called for the construction of a Club of debtors of the unpayable debt. Since then, there have been innumerable popular campaigns in the region that have raised the slogans of suspension of debt payments, while demanding exhaustive investigations of the same to define the legitimacy, illegality and even the odious nature of the debts.

That is why today, the intervention of the IMF in the region is not different from the tradition, associated with the promotion of a strategy of subordination to the capitalist logic. At the same time, the extension of national campaigns denouncing indebtedness stands out, as was done a few days ago in Mexico on the occasion of the World Social Forum (WSF). The CADTM world network held its regional assembly within the framework of the WSF and held various meetings in several Mexican cities, denouncing the debt system and making known the construction of the promoter for the suspension of payments and investigation of the debt in Mexico.[4] The question of the struggles against the debt and the IMF had a leading role in the popular summit of the WSF in Aztec territory.[5]

The issue is worrying and is aggravated in the current crisis conditions. On the IMF website, you can read a recent article signed by a group of IMF collaborators and headed by the Director of the Western Hemisphere Department, which highlights:

“With public debt-to-GDP ratios above pre-pandemic levels and rising financing costs in a context of higher international and local interest rates, countries will need to ensure the sustainability of public finances. to help preserve its credibility and rebuild fiscal space.”

The traditional call for “debt sustainability” is clear, for which fiscal reforms are induced, with more taxes and lower expenses, clearly identified in recommendations “such as the increase in personal income taxes”

Tradition points to the fiscal regressiveness of tax regimes that are unloaded on the sectors with the least chance of facing the dynamics of the crisis. In this sense, the IMF reiterates its demand for structural reforms, of the labor, pension and tax regime. It is clear that in the horizon of recomposing the rate of profit, popular income must be reduced, in salary, pensions, or social plans, including public spending geared towards the needs of the population.

The peoples need to recreate and expand the campaigns against the adjustment and the regressive restructuring implicit in the IMF programs, in a time of expanding debt, not only public debt, but also that of companies and families.


Let us insist on the determining nature of indebtedness and the role of the IMF. This is corroborated by the credit allocated in 2018 for 57 billion dollars, of which 45 billion were disbursed. It is a figure that is above twice the loan allocation capacity according to the regulations of the international organization. Not only did the IMF fail to comply with its statutes and rules, but it was aware that Argentina could not reimburse.

Why then did the IMF make the loan? There are many reasons, among which political arguments predominate. The US needed to consolidate governments friendly to its foreign policy on the continent, and its bet was on the continuity of the explicitly right-wing government in the elections at the end of 2019. It was an unattained goal. In the same way, it was proposed to condition the incoming government, which ended up being of a different political nature, but which, by assuming the negotiation with the IMF to restructure the repayment of the loan, subordinated itself to the logic of conditioning. It also put pressure on the local ruling class in Argentina, which includes foreign capital, which needed foreign currency income to make capital flight viable, be it due to the cancellation of previous debts, remittances of profits abroad or the constitution of assets abroad. They are capital flight mechanisms for which it was necessary for foreign currency to enter. That was also the mission of the IMF to grant the loan.

In short, the IMF is functional to the demand of the hegemonic partner, the US, and to the needs of the dominant classes in the local order.

With the agreement signed in 2022, a parenthesis of a couple of years was established to renew the loan for the sole purpose of canceling debts with the IMF and with monitoring (audit) by the IMF every three months. In fact, a co-government with the IMF. After the cancellation of the 2018 loan, there remains a new credit of extended facilities for an amount of 44,000 million dollars, with maturities until 2034.

The non-payment of that credit can be presumed and, therefore, a horizon of renewals and conditionalities of the IMF for several governments in the immediate future of Argentina. All great conditionality while assuming the inevitability of legalizing those credits and condemning the country to perpetual adjustment.

The alternative path comes from the popular campaign initiated at the beginning of the current government administration, with the creation of the Self-call for the suspension of debt payments and its investigation, which in the course of its action grew in coordination with other spaces , especially those conceived from the parliamentary left, with joint mobilization initiatives to deploy a proposal to reject the agreements with the IMF and other creditors of public debt. The rejection, even partial, of the agreement in the government coalition, enables the expansion of the political and social arc that promotes the rejection of the debt and the IMF.

The reality presents both facets, those of the agreement with the IMF, which in a framework of high inflation and fiscal and monetary restrictions calls for adjustment and greater suffering for the impoverished sectors. It is a situation that sharpens discontent, protest and the potential to broaden the spectrum of confrontation and social and political rejection of the agreement with the IMF. It is also clear that the rejection of the debt is the starting point of a comprehensive program that confronts the regime of capital and envisages the conditions of an emancipatory perspective. The ideas and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Al Mayadeen

  • Argentine economist and university professor.

We want to say thanks to the author of this short article for this remarkable content

Critical thinking. The IMF and the history of subordination in the Latin American and Caribbean region – Latin American Summary

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