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Argentina's President Cristina Fernandez de Kirchner (above) looked ebullient to the point of giddiness in her group photos at the G20 summit last week. And why shouldn't she be?
Besides getting to stand near dreamy Barack Obama, she had the symbolic honor of a place at the great table of the Group of 20 nations. This is not to be taken for granted by Argentina, which had become a financial pariah in recent years, after decades of macroeconomic dysfunction and delinquency.
But for exactly the same reason that the summit was a mildly triumphant moment for the Argentine government, it was also a mostly inconsequential one. Argentina cannot avail itself of the major fruit of the discussions, the new $750 billion in the International Monetary
Fund, because of its bad recent history as a deadbeat borrower — it defaulted on part of its external debt at the beginning of 2002. In addition, the government's lack of financial transparency and reliable statistics make it ineligible for an IMF loan.
Nor is it clear that Argentina would want one. Like those of many Latin American countries, the government of Argentina feels that the IMF has burned it before, and could do so again. The last time the country indulged itself in the IMF's resources and the attached strings, in the 1990s, many of its most important economic indicators, like unemployment, went up in flames.
Many in the country believe that Argentina's economic collapse in 2001 was a result of its posture as the IMF's poster child. In 2006, seeking to "bury an ignominious past of eternal, infinite indebtment," then-President Nestor Kirchner had his government pay off its debt to the IMF and cut itself loose.
The IMF seems to be fashioning itself as a kinder, gentler lender with new rules passed a few weeks ago, but it's still unlikely that Argentina will trust it again soon. The current Kirchner
administration's chief of cabinet reportedly denounced the IMF as not having "reformed itself to the degree required" with its new lending rules that ease up the demands placed on countries holding loans. The government apparently still feels that the IMF's rules don't meet the
conditions that would allow Argentina to involve itself again; and that might not just be sour grapes over the fact that the IMF apparently feels the same way.
There are a few things in the G20's package that just might help Argentina. Of the $250 billion in so-called "Special Drawing Rights", the fluid universal currency used by the IMF, Argentina will get 1 percent.
That sounds like an unfair share for one member out of 20 at the table, but it's more than 50 times the paltry $46.5 million of foreign reserves currently in the Central Bank of Argentina. And hopefully the quarter of the trillion-dollar international package meant to stimulate trade will shore up Argentina's sagging exports, a backbone of its economy. But if nothing else, Argentina might just be happy to have beat out several richer countries — including its father-country, Spain — for a seat at the big G20 table.