Argentine Debt Restructuring - Disindebtment Policy

Disindebtment Policy

During the restructuring process, the International Monetary Fund was considered a "privileged creditor", that is, all debt was recognized and paid in full. In 2005 Argentina shifted from a policy of constant negotiation and refinancing with the IMF to payment in full, taking advantage of a large and growing fiscal surplus due to rising commodity prices, with the acknowledged intention of gaining financial independence from the IMF.

The Nobel Prize economist Joseph Stiglitz repeatedly criticized the IMF and supported the Argentine strategies on the debt restructuring, but opposed the disindebtment policy, suggesting instead that the IMF should receive the same treatment as the other creditors.

The main criticisms of disindebtment were, in the first place, that the large amounts of money used to pay off IMF debt were made unavailable for productive purposes within Argentina or to come to terms with outstanding creditors; and second, that the government traded cheap IMF credits for new emissions of public debt at much higher interest rates.