Argentina repaid its IMF debt today, digging into its Central Bank reserves to come up with the money. A good review of news stories on this is available on the World Bank’s website.
There are conflicting opinions out there. Some say this move is a signal that things are improving in Latin America and that Argentina has completely recovered from its financial crises. More importantly, Argentina no longer has to deal with detailed conditionalities that IMF loans are notorious for and it can implement whatever policies it wants. On the other hand, some question whether the country will be able to withstand financial shocks now that its reserves are depleted and whether the abandonment of the IMF loan requirements will lead to reversals from pro-market economic policies. This seems like an interesting dilemma. Comments/suggestions are welcome.
And, of course, Argentina is not completely debt free, as it still owes another $16 billion to the World Bank and the IADB.
Published Date: January 04, 2006