Time for another IMF tune?

Austin Fido

DOUBTLESS the topic of a PhD thesis somewhere, there’s an entire subgenre of music documenting the International Monetary Fund (IMF)’s resounding unpopularity around the Caribbean.

Claxton-Bay-born Lord Laro’s playful and melodic commentary on mid-80s Jamaica, IMF, casts the institution as a predatory suitor, “The 'I' and the 'M' is all right but is the 'F' we frighten for,” his song’s heroine warns.

Black Wizard’s The IMF gave Grenada what might be the best rhyming summary of the agency’s modus operandi ever written: "All you Third World countries, really feeling the squeeze/Only empty treasuries and bankrupt economies/You can’t balance your budget, you’re riddled with foreign debt/But I don’t mind, a loan I’ll give to you/Once you keep in line and do as I say to do.”

Ras Iley offered Barbados a more blunt assessment in 1992: “Mama, look what the Devil do: IMF Take Over.”

Lovindeer greeted Jamaica’s 2010 deal for IMF dollars with a faux-gospel praise song set to the tune of I Am Blessed: “IMF, IMF, every day all we hear is IMF/Government no have no money, so no option no lef’ – IMF, IMF, IMF.”

The days of regional economies getting a jolt of austerity in exchange for bailouts seem to be mercifully over (or paused) for now, but the fund is still very much in business. Those who suffered through the retrenchment required when debt-addled governments seek IMF salvation might enjoy a frisson of Schadenfreude at the news the fund is in a bit of a pickle.

That pickle is thanks to Argentina’s mad-professor president, Javier Milei, who is seeking to negotiate fresh funding for the latest phase of his vigorous effort to revive his country’s economy.

You will recall Milei ended 2024 on a high note: inflation reduced to a mere 100 per cent year-on-year rate of increase (it was 300 per cent, so definitely an improvement), budget deficit turned into budget surplus, and consistently strong popularity ratings despite deep cutbacks to just about every public-sector activity and government commitment he could find. The trade-offs included about half the country living in poverty and an economy that shrank by 3.5 per cent for the year.

But most forecasts expect the Argentine economy to rebound with gusto in 2025, and Milei is hoping to ride that resurgence to big wins in forthcoming legislative elections this October. Given that everything he has done to date has been without much formal backing in the legislature, the assumption is Milei’s outsider presidency will be turbocharged if he can win real support within the Chamber of Deputies and Senate at the ballot box.

First, however, Milei needs some cash in hand to protect the economy from the threat of collapse as he moves toward one of his long-held ambitions: dollarisation of Argentina.

The problem for the IMF is the threat of collapse doesn’t just go away if Milei gets what he’s asking for – and what he is asking for is US$11 billion.

Per World Politics Review’s James Bosworth, only Ukraine and Egypt have a debt to the IMF totalling more than $11 billion. And Argentina is asking for that US$11 billion as an add-on to the US$40 billion it already owes. That’s around 25 per cent of the IMF’s total loans, or more than is owed by the fund’s next three largest debtors – Egypt, Ukraine, and Pakistan – combined (according to figures compiled by fDi Intelligence).

As WPR’s Bosworth points out, Milei has turned his country’s US$40 billion debt into a bargaining chip. Very simply, he wants the US$11 billion loan to mitigate some of the risks that will come with dismantling Argentina’s complex and restrictive system of currency controls. Foremost among those risks is a crisis that could see default on things like IMF loans. But he’s also said he will get rid of those currency controls by the end of this year, whether the IMF gives him more money or not.

This gives the fund a choice: pay Milei to at least try to protect the investment already made in Argentina, or roll the dice on the wild-eyed president’s next move working out, absent the financial help it’s agreed he probably needs.

It’s a tough spot for the IMF, but Black Wizard surely remembers the days when the fund was running around the region, upending governments and economies: “The people could riot/I don’t care about that/To your cries for mercy I’m deaf/Because I am the IMF.”

Might be time to update the Caribbean’s IMF songbook with a tune about Schadenfreude.