Argentina President Indicted for Accepting IMF $50B Standby Loan Without Authorization

President Mauricio Macri and other officials have been indicted on criminal charges for their role in accepting a US $50 billion standby loan from the International Monetary Fund, without authorization from Congress.

The charges, for abuse of authority and violation of duty, were filed after Popular Unity leader Claudio Lozano and Jonatan Baldiviezo, from the Right to the City Observatory, filed a lawsuit against the government officials on September 4. Federal prosecutor Jorge Di Lello filed the charges, stating that based on evidence collected to date the actions from Macri and his colleagues could be considered unconstitutional and illegal.

As Lozano noted in a statement, the fault was both against the IMF as well as the President and the others charged. As he said as the indictment was announced, “Macri’s government incurred an abuse of power by not submitting the IMF agreement for Parliamentary approval as the National Constitution orders. … On the other hand, the IMF made the loan in violation of its own statute, which prevents it from lending money to countries without a capital flight situation.”

After the legislature had challenged the legality of the loan – but before the lawsuit was filed, President Macri on September 3 announced plans for new cuts in public spending and a new agreement with the IMF. Although all that may be necessary, especially considering the recent fall of the Argentine peso to an exchange rate of 38.99 peso to the American dollar, until this lawsuit and the criminal charges are resolved, that will not likely be able to go forward.

Despite the lack of legal approval from the National Constitution, Argentina already received an estimated US $15 billion of the total US $50 billion loan. The government even asked for an advance of funds planned to be released for 2019.  On Tuesday, Argentina’s Finance Minister took the situation a step further by meeting with Christine Lagarde, the IMF’s executive director, to find ways to access those early funds.

With the current situation still pending, even the $15 billion which the government already took in may have to be returned. Lozano and Baldiviezo’s criminal suit includes a writ of protections which would require nullification of the entire $50 billion standby loan.