How Argentina’s crises have shaped the Pope’s thinking
Catholic Herald, 07 November 2019
For nearly a century, Argentine economic policy has kept the poor in poverty, and added to their number.
Cry for Argentina. Further economic suffering is on its way, and that has implications for the Catholic teaching on the economy under native son Pope Francis.
The recent elections have brought the Peronists back to the presidency. Alberto Fernández won the elections on October 27, defeating the more pro-market Mauricio Macri. Peronists have a decades-long record of presiding over the economic decline of Argentina, to the point even of precipitous collapse.
The pain began less than 24 hours after the election, with the Argentine central bank restricting dollar purchases to only $200 a month, effectively locking Argentines into their rapidly devaluing currency.
The economy which Fernández inherits from Macri is already a disaster on multiple fronts. The economy shrank by 1.7 per cent in 2018, and is projected by Moody’s to shrink a devastating 3.9 per cent this year and a further 2.5 per cent in 2020. Those figures are more severe than the “great recession” that hit America in 2007-2009. Inflation is a staggering 53 per cent.
Argentina has a $100 billion foreign debt that it cannot repay. To prevent a default, Macri secured a $57 billion bailout from the International Monetary Fund just last year. And so for the umpteenth time Argentina and the IMF begin their dance of desperation.
IMF bailouts – which are a regular part of Argentine economic policy – come with a mandate for austerity to get fiscal policy back toward balance. The consequent austerity is painful and thus unpopular, setting up a conflict between the national government and the IMF. Already the IMF has suspended a $5 billion instalment after the Macri government did not deliver the promised fiscal restraint.
Fernández waged his victorious campaign with a promise to resist the fiscal measures called for by the IMF to put Argentina’s finances on a more stable footing. The IMF will continue to insist on fiscal responsibility; the Peronists will reject that pressure, and Argentina will most likely stagger toward another national default.
Argentina is the great delinquent of sovereign finance, needing some 30 relief packages from the IMF over the years; the 2018 bailout was the largest in IMF history. Not that the bailouts have helped much; Argentina has defaulted on its sovereign debt an astonishing eight times, including the mammoth $93 billion default in 2001.
What does all this mean for Catholic social teaching under Pope Francis?
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