Argentina: Caputo bows to the might of the IMF
The resignation letter of Luis Caputo, until September 25 the president of Argentina’s central bank, is effectively the IMF’s receipt for the purchase of the country’s monetary policy.
And with a price tag of $57 billion, the cost to the IMF is substantial – it is the biggest loan ever made by the organization.
Caputo reportedly resigned in frustration at the IMF’s strict loan conditions, which prevent the central bank from intervening in the currency markets unless there is “extreme circumstances” (and then, surprisingly, the IMF defined that as lower than Ps44 to the dollar.) Caputo’s exit rams home how far president Mauricio Macri’s economic strategy has come off the rails.
It was Caputo who managed the negotiations with the holdouts that enabled Argentina to return to the international markets. It was Caputo who was the face of those comeback bond transactions – many investors at the time said that they were entering orders because of their faith in the ex-Deutsche Bank investment banker (and his team). It was also Caputo whom Macri relied on to restore faith in the central bank after errors made during the tenure of the former president, Federico Sturzenegger, sparked a crisis of confidence and a run on the currency – the first stage of the crisis that would bring IMF chief Christine Lagarde to visit Buenos Aires.