Debt & Democracy
Debt and Democracy
What happens to democracy, when debt repayments dictate government spending? How is sovereignty affected when policy choices prioritise creditors over citizens' human rights? What does it mean for the environment and people’s rights when creditor institutions dictate policies? Explore these linkages in the following videos.
Argentina
By Aylén Tapia, Parlamento Mapuche Tehuelche
Argentina is in a debt crisis. In 2024, 18.9 per cent of government revenue was devoted to paying external creditors, far exceeding the International Monetary Fund’s (IMF) own debt sustainability threshold of 15 per cent. Moreover, when we add domestic debt to the mix, debt service mounts up to 63 percent of government revenue. While most of Argentina’s debt is owed to private creditors, mostly bondholders, and to bilateral creditors, predominantly China, the country’s debt history and present crisis has been significantly shaped by IMF programmes and their conditionalities.
Following IMF dictates, debt repayments have historically and continue to be prioritised over social protection and public services. The current far-right Milei government, with the IMF’s blessing, is undertaking a radical austerity and deregulation programme. As a result, the burden of these adjustments falls heavily on citizens who are directly affected by the cuts to public services, wages, pensions and social protection, particularly those most vulnerable and especially women and girls.
The debt crisis in Argentina is not just a social and human rights crisis, but also an environmental and democratic one. Following IMF advice, Argentina has relied on large-scale fossil-fuel extraction and exports to repay its debts. Vaca Muerta, an oil and gas extraction project located in Mapuche territory in Neuquén, is a key example of this dynamic. The shale fracking requires large amounts of water, generates toxic waste, increases pollution and affects indigenous people, local communities and ecosystems.
The history of IMF involvement in Argentina is a clear example of how the Washington-based institution and the debt burden combined can undermine a country's sovereignty, determining the way the country manages its natural resources, public budgets and policy choices.