Stiglitz on Argentina: 'Neoliberal Experiment Has Failed'
Only a few days after Argentina's Congress voted to extend the Food and Nutrition Emergency, Professor Joseph Stiglitz talked about the critical situation that the South American country faces as a consequence of a President Mauricio Macri's “failed economic formula” of neoliberalism for the nation.
“Macri bet wrong and now the country is paying a high price for the mistake,” the 2001 Nobel Prize winner told progressive Buenos Aires daily Página/12 when asked about the president's economic policies since taking office in late 2015.
“Argentina ... and the bankers are the ones to blame, including the International Monetary Fund (IMF). They made the mistake of supplying those funds.”
“I warned that he (Macri) was committing a great risk by reducing export withholdings. These profits brought about the rise in food prices and the impoverishment of lots of workers.”
Macri's export tax cuts, enacted by decree within days of taking office, cost public coffers around $4 billion annually, helping swell federal deficits from 3.8% of GDP in 2015 to 5.3% in 2017 and 2018.
They also helped drive inflation from 25% in 2015 to 55% this year; food inflation in particular has risen to 59%.
Macrisis
Argentina's GDP has fallen 6.9% since a carry-trade debt bubble known as the “financial bicycle” collapsed in April 2018. The loss of 262,000 registered jobs has pushed unemployment to 10.6% in the second quarter, its highest in 13 years.
The crisis forced Macri to turn to the IMF for a record, $57 billion bailout last year. Former IMF Director Christine Lagarde, who approved the bailout, asserted on Friday that “had we done nothing, I think (the crisis) would have been a lot worse.”
Critics, however, note that most of the $45 billion lent so far by the IMF has left the country by way of capital flight.
Opposition candidate Alberto Fernández, who leads in most polls by 20% or more, pointed out that total capital flight since Macri took office - an estimated $107 billion - equals the net increase in the public foreign debt.
Macri defaulted on around $32 billion in short-term debt on August 28, including peso-denominated debts - the first Argentine default on public debts denominated in its own currency.
At: https://www.telesurenglish.net/news/stiglitz-about-argentina-neoliberal-experiment-has-failed-spectacularly-20190921-0013.html
Professor Joseph Stiglitz with former President Cristina Fernández de Kirchner in 2012.
Stiglitz who praised Kirchner's “resolution of macroeconomic crisis and sovereign debt restructuring,” as well as “reducing inequality and poverty,” has been critical of Macri's “failed bet” on corporate tax cuts, financial deregulation, and foreign debt since succeeding Kirchner in 2015.
Amid the deepest crisis in two decades, Macri's re-election bid is behind by 20% or more in most polls.
