CSO letter to the IMF: Fiscal costs of the climate crisis in the fourth review under Argentina’s Extended Fund Facility arrangement

PRESS RELEASE

Recourse has joined 25 organizations in addressing the IMF in a joint letter sharing concerns around the failure of the institution to properly address the costs of the climate crisis in its latest review under Argentina’s Extended Fund Facility arrangement. 

Argentina is facing a historic climate-related drought. This will significantly impact the country’s exports which are highly dependent on agroindustry. Even though the IMF agreed to update the foreign reserves target for 2023 due to the expected decrease in exports, the latest review excludes an update of the fiscal deficit target. The expected decrease in fiscal revenue from export duties and income tax means the target can only be achieved through budget cuts. The reduction of energy subsidies, social spending and public investment has been agreed to this end. 

This means most vulnerable Argentineans will pay the fiscal cost of the climate crisis, for which the IMF’s biggest shareholders are the main responsible. This is a clear example of the IMF’s wrongdoing in considering climate risks in its loan program activities. 

To this end, CSOs in this letter request the IMF to: 

• Take effective measures to guarantee fair and equitable financing for climate mitigation and adaptation, specially in those countries with high borrowing costs and facing a debt crisis, like Argentina, as recommended by the IPCC, according to which this is a requirement to ensure meeting the goals of the Paris Agreement.
• Ensure a human rights impact assessment of the debt strategy, as noted by the UN Special Rapporteur, with special attention to environmental impacts while ensuring that countries count with fiscal space to design their long-term climate policies;
• Grant debt relief without conditionalities to middle-income countries, such as Argentina, to enable them to meet their climate policy objectives;
• Include climate finance needs, both mitigation and adaptation, into their Debt Sustainability Analyses during the review of the MAC DSA;
• Ensure natural disaster clauses in case of extreme weather events in order to reduce pressure on countries’ fiscal space;
• Eliminate surcharges, which unfairly places the burden of securing resources for the IMF on indebted countries;
• Maintain the necessary assistance to improve the social indicators of poverty and indigence, aggravated by the inflationary situation.

Media Contact:

For press inquiries / interview requests / further info please contact, Federico Sibaja, Recourse Campaign Manager,  federico@re-course.org, +32 491 19 93 67 (Whatsapp/Signal)