Argentina’s economy has been marred by repeated crises, with the International Monetary Fund often at the center. In the early 2000s, the country was on an unsustainable path: under the IMF‑backed Convertibility Plan, the peso was fixed to the dollar, and debt piled up throughout the 1990s. The scheme collapsed by December 2001, when a partial bank deposit freeze, a default on debt, and the end of the peg plunged output into freefall and produced mass unemployment and political turmoil. One observer notes that by late 2002, “society angrily ‘kicked out’” the president and cut ties with the IMF and neoliberal rule. In the aftermath, the left‑of‑center Kirchner administration repudiated much of the prior policy. By 2005, it had fully repaid Argentina’s outstanding IMF debt, effectively driving the Fund out of Buenos Aires for a time.
Argentina charted a different course for over a decade, focusing on social spending and import substitution. However, these policies left other imbalances that surfaced in the mid‑2010s. In 2018, the incoming government of Mauricio Macri shocked progressives by inviting the IMF back for a massive loan, reported as originally $57 billion and later roughly $44 billion, ostensibly to “prevent” a crisis. The deal required painful austerity. Macri agreed to cut 0.5% of GDP from wages and government payroll to satisfy the IMF’s conditions, even as officials vowed that tight monetary policy and a free‑floating peso would reduce inflation from 27% to 9% within two years. Alternative strategies, such as progressive taxation or investment incentives, were dismissed as infeasible.
The real economy soon suffered. Exorbitant interest‑rate hikes forced Argentina into recession. Industry “was demolished,” production contracted, and layoffs mounted. By 2018–2019, GDP had shrunk (estimates are around –2.6% in 2018 and –2.0% in 2019), and poverty spiked by roughly 50%. Workers’ pay and pensions lagged further behind rising prices. In short order, public confidence collapsed. A retrospective review even admits the IMF’s program became procyclical, exacerbating capital flight instead of bolstering confidence. With capital controls off the table, “the wealthy and well-connected” took dollars out of Argentina at a favorable exchange rate, leaving “nothing to show” for the $44 billion loan except “an enormous hole in its balance sheet.” In early 2020, the IMF quietly agreed that Argentina’s debt was unsustainable, paving the way for the new government to restructure bonds with private creditors, a move that, by some accounts, helped the economy regain a million jobs and a 35% jump in investment once the crisis began to ease.
When President Alberto Fernández’s team reached a tentative accord with the IMF in early 2022, it was met with fierce debate. On the one hand, the deal formally backed away from declaring even more draconian cuts, and prominent economists hailed it as a turn away from the failed austerity of 2018. On the other hand, protesters filled Buenos Aires’ streets waving signs like “No to the pact with the IMF” and “The IMF is poverty and unemployment,” insisting that any new agreement risked a familiar “adjustment for working people.” In March 2022, the IMF Executive Board approved a new 30‑month Extended Fund Facility of about SDR 31.9 billion (roughly US$44 billion). The official press release claimed the program would pursue “pragmatic and realistic objectives,” strengthening public finances, bringing down inflation gradually, and even addressing social and infrastructure gaps. Yet the technical content was similar to past programs: focusing on deficit targets, reducing money printing for spending, and modernizing the central bank’s framework. From the left’s viewpoint, the key question remained how those objectives would be met.
A few years later, Argentina was again under an IMF program. In April 2025, the Fund approved another four‑year Extended Fund Arrangement for about $20 billion. The IMF’s deal summary emphasizes a “strong fiscal anchor” and policies to open markets and improve competitiveness. In other words, the Fund is again pushing a market‑oriented agenda intending to attract investment. Progressive critics fear this translates into fiscal and pension cuts or labor reforms under another banner, repeating the pattern of past crises.
In contrast, a progressive economic path for Argentina holds significant potential, resting on fiscal justice and active development policy. First, Argentina needs to reverse its over‑reliance on regressive taxation. The existing tax structure falls hardest on consumption (sales taxes) and labor, while income and wealth are undertaxed. One recent analysis notes that “it is necessary to reduce the weight of taxes on goods and services and strengthen taxes on income and wealth.” In practice, this means raising revenue from the rich instead of cutting services. Argentina already has a modest annual wealth tax (Bienes Personales) and a higher capital-gains rate on financial assets, but both could be substantially tougher. A 2016 one‑off wealth amnesty demonstrated the potential: when the government offered immunity to wealthy owners who repatriated hidden assets, declarations equivalent to 21% of GDP were brought into the tax net, and revenue from the wealth tax roughly doubled. That experience underscores how much wealth is untaxed under the table and suggests how a more rigorous enforcement regime could yield billions for public needs.
Similarly, closing tax loopholes and curbing evasion should be top priorities. Progressives point out that the global crackdown on offshore hiding makes it easier than ever to enforce taxes: treaties to share banking data and leaks like the Panama Papers have “drastically increased official disclosures” of Argentine-held assets abroad. By leveraging these tools, Argentina could reclaim revenue lost to shell companies or carry forward losses. It could also tighten the tax code against abusive practices, for example, eliminating special exemptions for unprofitable firms or toughening oversight of transfer pricing. In short, instead of basing stability on “starve the beast” budget cuts, a strategy that involves reducing government spending to force a reduction in the size of the public sector, the government could fund budgets by asking the wealthy to pay their fair share.
On the export side, a progressive outlook embraces export taxes (duties) as part of the tax toolbox rather than ruling them out. Argentina is one of the world’s largest agricultural exporters, and its traditional “retenciones” have been a key source of revenue. Even the IMF notes that exports of core grains like wheat and corn were taxed (around 12%) as recently as 2022. Progressive economists argue that taxing the windfall profits of commodity exports, especially in a boom year, can help stabilize prices at home and finance development. Indeed, in March 2022, the Fernández government raised the export tax on processed soy products to 33% (a rate matching raw soy) to fight inflation. Although agri‑industry groups protested that this “punishes industrialization,” the revenue from export duties is significant.
In contrast, the new government’s decision in January 2025 to eliminate export taxes on soy, corn, and wheat drew criticism from the left as simply handing subsidies to large producers. A progressive strategy would use these instruments more cleverly, for example, channeling export-tax proceeds into rural development, irrigation, and technology programs that benefit small farmers and food security rather than letting them all flow to big exporters. At a minimum, it would preserve a floor on export levies instead of scrapping them entirely so that exports contribute to the national budget during good years.
Beyond taxation, active industrial policy can help Argentina break out of the boom‑bust cycle. For decades, targeted state support of industries and technology paid dividends. Take the auto sector: when the government in the 2000s incentivized local production, even dominant multinationals like Toyota set up a regional hub in Argentina. The measures included a higher tariff on imported cars, a requirement to use domestically made parts, and subsidized credit for factory investment and grants to nurture local suppliers. As a result, Toyota Argentina became an exporter of pickups and a job generator. In other words, import restrictions were paired with industrial subsidies, and the outcome was more vehicle exports from Argentina, not just cheaper foreign cars. Progressive policy would replicate such moves today: for instance, a new National Auto Parts Law (as existed under Kirchner) could give transferable tax credits to carmakers that achieve a high percentage of local content. A public development bank could offer low‑interest loans to manufacturers and exporters based on value‑added created domestically.
Similarly, Argentina should revive support for its technology and energy sectors. In the 2010s, Kirchner’s government launched a “Knowledge Economy” law that granted tax breaks and financing to software exporters and biotech firms. It also invested heavily in renewable energy projects with local content requirements. More recently, the progressive turn in energy (including renationalizing YPF and promoting Vaca Muerta shale gas) has set the stage for growth. Indeed, a recent study observes that the shift in energy policy “turned [the oil & gas] sector into a potential driver of industrial development” not only by earning foreign exchange but by spawning linkages in machinery and chemicals. A progressive agenda would build on that: coordinating new oil and gas deals with local engineering and chemical industries and using royalties or state equity from natural-resource projects to seed R&D and training. Moreover, one can envision a Marshall‑Plan‑style investment in the regions: the government could fund technology parks (CONICET and INTI already exist), upgrade public transit networks, and modernize ports and telecom. Each infrastructure project would have local procurement requirements to support small businesses.
Supporting small and medium enterprises (SMEs), in particular, is a pillar of progressive industrial policy. SMEs account for a large share of Argentine employment and often struggle for credit and markets. The state could create or bolster guarantee funds so local firms can borrow at modest rates, just as Brazil’s BNDES helped its firms grow. The tax law could formally reserve a fraction of government contracts for domestic SMEs (a positive use of “Buy Argentina” rules). The 2017 Entrepreneurship Law (FONDOE), which created a public venture capital trust, is an example that could be expanded to finance startups in fields like fintech, agro‑industry, and green technology. All of these interventions would not require turning over the economy to markets; quite the opposite, they use state resources to develop competitive sectors that the market alone may underinvest in.
In short, there is an alternative to the IMF’s A‑to‑Z austerity regimen. Instead of balanced-budget dogma, progressive economists advocate a “fair‑shares” approach: affluent households and businesses pay more, and those revenues are plowed into growth‑oriented spending. The aim is not perpetual bailouts but a sustainable expansion of the economy’s productive base. Argentina could break the debt trap by strengthening public education and healthcare, modernizing infrastructure, and jump‑starting key industries funded by progressive taxation.
This is not a mere theory. Argentina’s history and data lend weight to it. After the 2001 crisis, years of expansionary fiscal and trade policy led to higher per‑capita growth than Argentina managed under later austerity regimes. Likewise, in the 2010s, when Kirchner boosted manufacturing with subsidies and local content, the economy diversified, and poverty fell faster than in periods dominated by IMF‑style orthodoxy. Today, ordinary Argentines facing high inflation and low growth are increasingly skeptical of turning the economy into “market confidence.” The question is whether policymakers will heed those instincts. Progressive advocates argue that with the right combination of fair taxation and public investment, there is a viable development path that does not rely on repeating the past mistakes of IMF‑imposed austerity. Only by reclaiming economic strategy as a national project rather than surrendering it to external creditors can Argentina hope to build a more stable and equitable future.
Add comment
Comments