Javier Milei Deepens Argentina’s IMF Debt Trap With ‘Emergency’ Loan

In a previous article, Geopolitical Economy Report showed how Argentina’s real economy is in severe crisis under Milei. 53% of the population is in poverty, and manufacturing and construction are collapsing amid rapid deindustrialization. However, the stock market has boomed, enriching Milei’s oligarch backers — although even the financial sector took a hit after Milei promoted a crypto scam that caused thousands of his own supporters to lose millions of dollars.

This present report is about a different, but related topic: how Milei is deepening the debt trap that Argentina has been caught in with the US-controlled International Monetary Fund (IMF).

One of Milei’s main promises, which he reiterated endlessly, was that he would not increase government debt.

In March, Milei broke this promise and revealed that he was issuing an emergency decree in order to request a loan from the IMF. The exact amount was not disclosed, but local media outlets estimated that it would be between $10 billion and $20 billion USD.

The IMF has a notorious history in Argentina, and in Latin America in general, as an instrument of Western geopolitical power, which has imposed brutal neoliberal austerity measures on formerly colonized nations. Its aggressive “structural adjustment” policies contributed to the “lost decade” of economic crisis and stagnation in the 1980s.

The United States is the only country with veto power in the IMF. The managing director of the Fund has always been European (whereas the World Bank is always run by a US citizen).

In Latin America, the IMF is widely seen as a symbol of neocolonialism.

Although Milei cynically poses as a “populist” who is supposedly challenging the established political class, his IMF bailout epitomizes how he is continuing the same old neoliberal policies of the elite right-wing presidents who came before him.

Argentina has been trapped in odious debt for decades, following a consistent pattern:

Corrupt right-wing leaders come to power, and they take massive loans from the IMF, in an attempt to strengthen the currency and stabilize the economy (and facilitate capital flight for their super-rich oligarch backers).

This traps Argentina in unpayable debt, and foreign exchange reserves run low until the South American nation no longer has enough dollars to service the debt, which causes high inflation.

Inflation crushes the purchasing power of the working class (because average Argentines are paid in pesos, whereas the rich hold their wealth in US dollars), so people vote for a left-wing government that tries to pay off the IMF debt, as progressive Peronist President Néstor Kirchner did in 2006.

Kirchner said that, due to IMF debt, “The result has been exclusion, poverty, destitution and the destruction of our production apparatus”.

Kirchner reduced Argentina’s external public debt from 68.5% of GDP in 2004 to 21.8% in 2007.

Argentina’s leftist President Cristina Fernández de Kirchner (CFK) followed, governing from December 2007 to December 2015. She also forcefully rejected the neocolonial IMF.

Under CFK, Argentina’s external public debt continued to decline, reaching 13.9% of GDP when she left office.

The following chart, from Argentina’s Ministry of Economy, shows government debt as a percentage of GDP. The green line is external public debt; the red line is public debt with private lenders; the blue line is gross public debt.

Despite baseless conservative talking points about supposed fiscal profligacy by the Argentine left, the country’s economy was very healthy and debt was manageable under its left-wing Kirchnerist governments.

However, things changed when right-wing multimillionaire oligarch President Mauricio Macri came to power, in December 2015.

The IMF debt-trap cycle repeated.

Under Macri’s oligarchic rule, Argentina’s public external debt skyrocketed, from 13.9% of GDP in 2015 to 43.3% in 2019, when he left office.

Inflation under Macri grew significantly as well, from 26.6% in 2015 to 49.2% in 2019, even while he imposed harsh austerity measures, slashed social spending, and raised taxes on average working people.

As elections approached, Macri’s approval rating plummeted, falling to 26.8% in late 2018, due to the rising inflation, poverty, and inequality.

So the US government stepped in, meddling in Argentina’s internal affairs to try to help Macri win the 2019 election.

This was admitted by Donald Trump’s top Latin America advisor, Mauricio Claver-Carone. He revealed in 2020 that the Trump administration ordered the IMF to violate its own restrictions and to give Macri its largest loan in history, at $57 billion.

IMF economists knew that Argentina would not be able to pay off this debt, and that it was therefore odious. But the decision was a political one.

It helped that the US representative at the IMF at the time just so happened to be Trump’s Latin America advisor, Claver-Carone.

The right-wing, oligarch-owned Argentine media outlet Infobae, which supported Macri, conceded that this was a “political decision”. Trump was using the IMF to meddle in Argentina’s 2019 elections. He particularly wanted Macri to remain in power so the South American country could help the United States carry out its coup attempt against Venezuela’s socialist President Nicolás Maduro, which was launched in February 2019.

What happened with the huge sum of money that Macri’s government received from the IMF? Still to this day, this is a controversial question that is fiercely debated in Argentina.

A lot of the money simply provided liquidity to facilitate capital flight for Argentine oligarchs, in violation of the IMF’s stated policies.

Under Macri, capital flight tripled, totaling more than $86 billion from 2015 to 2019, according to the central bank (BCRA). A mere 100 rich individuals and firms transferred $24.7 billion (28.7%) out of the country, and 1% of Argentina’s companies were behind $41.1 billion, or 47.8%, of the capital flight.

Despite Washington’s help, Macri was widely disliked, and he lost the 2019 election. However, the enormous IMF debt tied the hands of the center-left President Alberto Fernández, who won the vote.

Fernández was basically a lame-duck president from the beginning. Even though he rejected the last $11 billion tranche of Macri’s IMF loan, Argentina was already trapped in odious debt it couldn’t pay off.

Argentina: Irregularities in Macri–IMF Agreement

Mere months after Fernández came to power in December 2019, the world was hit by the Covid-19 pandemic, which only exacerbated the economic difficulties in Argentina.

By 2022, the country had nearly run out of the dollars needed to service its external debt, and its net foreign exchange reserves were almost negative (as shown by economist Brad Setser). This was one of the main reasons for the rapid rise in inflation, which started to spiral out of control that year.

Argentina was on the verge of defaulting, which is why China stepped in, in 2023, and offered a swap line in renminbi (also known as yuan), which Argentina used to pay the IMF.

Alberto Fernández’s vice president was the former President Cristina Fernández de Kirchner (CFK), who publicly stated in 2021 that the IMF loan taken by Macri was odious debt and could not be paid.

In 2023, CFK declared that the IMF debt “is today the principal problem that the Argentine Republic has”. She then emphasized, “We didn’t bring it on”.

Argentina owes more debt to the IMF than any other country, by far. Argentina has $41 billion USD in credit outstanding, representing 28% of all debt owed to the Fund. (This figure is still accurate according to the most recently available IMF data, from March 2025.)

The inflation caused by this IMF debt is what led far-right libertarian Javier Milei to power. He capitalized on the anger at the economic crisis in Argentina, and he offered a simplistic solution: slash government spending to the bone.

Milei also promised that he would abolish the central bank and adopt the US dollar as the official currency, although he did not implement either of these policies. (Development economist Ha-joon Chang called Milei’s proposals “insane” and warned that Argentina abandoning its monetary sovereignty and adopting the dollar would turn the country into a US “colony”.)

Now, Milei is backtracking on another promise — his vow to never increase government debt — and is taking on a new IMF loan. In this way, Milei is continuing the same debt-trap cycle of his right-wing predecessors, which caused the very economic crisis that catapulted this fringe “anarcho-capitalist” madman into the presidential Pink House.

Plus ça change, plus c’est la même chose.

Former President Cristina Fernández de Kirchner condemns Javier Milei’s IMF loan

In response to the announcement that Milei would be requesting a loan of $10-20 billion from the IMF, left-wing former President Cristina Fernández de Kirchner (CFK) published a lengthy statement of condemnation on Twitter.

“Your Austrian School experiment failed you, you’re drowning because you lack dollars, and YOU’RE THROWING IN THE TOWEL BY ASKING THE IMF FOR A LOAN”, she wrote.

The following is an English translation of CFK’s March 9, 2025 post (the caps were in the original):

Hey Milei! IN THE END, YOU ENDED UP DOING THE SAME THING THAT MACRI DID.

Your Austrian School experiment failed you, you’re drowning because you lack dollars, and YOU’RE THROWING IN THE TOWEL BY ASKING THE IMF FOR A LOAN.

I just read the article you published yesterday in La Nación, where you’re trying to explain the inexplicable: that you’re going to ask the IMF for billions of dollars without creating new debt, because you’ll use those dollars to pay off the Non-Transferable Notes that the Treasury owes the Central Bank. ARE YOU SERIOUSLY TELLING US THAT THEY’RE GOING TO GIVE YOU BILLIONS OF DOLLARS AND THAT ARGENTINA’S FOREIGN DEBT WON’T INCREASE? Cooooome on! It’s the same thing Macri did when he said he was borrowing in dollars to cover the peso deficit, and [Minister of Economy] Toto Caputo ended up asking the IMF for $57 billion.

So, FOR YOU, “expert economist in growth with or without money,” IS A NON-TRANSFERABLE NOTE DEBT BETWEEN THE TREASURY AND THE CENTRAL BANK (WHICH IS AN INTERNAL, INTRA-STATE DEBT) — which is non-demandable, has no market value, carries a lower interest rate, and, moreover, is subject to national legislation — THE SAME AS A DEBT WITH THE IMF, which comes with conditionalities for national economic policy, has an interest rate plus surcharges of around 7%, has no possibility of reduction, and subjects the country to foreign legislation and judges?

And… WASN’T IT YOU WHO WANTED TO SHUT DOWN THE CENTRAL BANK because it was “the biggest thief that ever existed in Argentina”? AND NOW IT TURNS OUT THAT YOU’RE ASKING THE IMF FOR A LOAN TO “STRENGTHEN” ITS BALANCE SHEET? Give me a breeeeeak!

STOP LYING TO PEOPLE, MILEI… No one believes you anymore. IN REALITY, YOU’RE SO DESPERATE BECAUSE YOU NEED DOLLARS that you’re about to make a terrible deal for the country by SWAPPING A “CHEAP DEBT” THAT IS MANAGEABLE FOR ANOTHER “MORE EXPENSIVE DEBT” THAT, ALSO, SUBJECTS ARGENTINA TO PERMANENT BLACKMAIL: trading “colorful little papers” (as some call the Treasury Notes) for hard debt in dollars from the IMF. And you know all about these “colorful little papers”… because last year, you, Toto Caputo, and [Santiago] Bausilli, [the president] of the Central Bank of the Argentine Republic (BCRA), wrote off billions of dollars in Non-Transferable Notes like it was nothing.

The hard truth is that you realized long ago that THE MANTRA [from Milton Friedman] that you always repeat… “INFLATION IS ALWAYS AND EVERYWHERE A MONETARY PHENOMENON CAUSED BY AN EXCESS SUPPLY OF MONEY” — which you repeated again in the introduction of your article in La Nación — IS FALSE. That’s why THE ONLY STRATEGY YOU’VE BEEN USING AGAINST INFLATION IS KEEPING THE OFFICIAL PRICE OF THE DOLLAR ARTIFICIALLY LOW AND BURNING THROUGH BILLIONS OF DOLLARS TO CONTROL THE FINANCIAL EXCHANGE RATES and to prevent the exchange rate gap from growing, and, with it, the prices. It’s very obvious, Milei.

THE MILLION-DOLLAR QUESTION: What will the IMF demand regarding the exchange rate? DEVALUATION — BEFORE OR AFTER THE ELECTIONS?

P.S.: Oh… and one more thing. Stop repeating the lie that you’re the first government in history to have a surplus while paying off debt.

NÉSTOR KIRCHNER PAID THE IMF all of the debt in 2005, and that same year HE MADE THE FIRST PAYMENT ON THE BODEN 12 [BONDS] (which were issued in 2002 to compensate savers who lost their dollar deposits at the hands of the banks during the collapse of the convertibility regime), continuing with payments in 2006 and 2007 — YEARS WHEN HE ALSO PAID INTEREST ON THE RESTRUCTURED DEBT (WITH THE BIGGEST REDUCTION IN PRINCIPAL AND INTEREST IN HISTORY) AND GDP-LINKED COUPONS, AND ALL WITH A SURPLUS. Like it or not, Milei, WITH THE PEOPLE INCLUDED, WE PAID OFF ARGENTINA’S DEBT LIKE NO ONE ELSE. If you don’t believe it, ask [Nicolás] Dujovne, who was a minister alongside Toto Caputo in Macri’s administration.

And you know what? Since the passage of the Sáenz Peña Law, WE ARE THE ONLY POLITICAL FORCE ELECTED BY POPULAR VOTE TO COMPLETE THREE CONSECUTIVE TERMS IN GOVERNMENT (2003-2015)… and morevoer, we increased our vote count in each election.

YOU AND YOUR SISTER WILL NEVER EXPERIENCE THAT.