January 24, 2022 2:17 pm

The legal architecture of the foreign debt restructuring and the agreement with the IMF

The debate that occurs regarding the restructuring of the debt with the International Monetary Fund (IMF) is focused, until now, on the economic aspects of the solutions to be adopted, although it seems appropriate to attend to constitutional and legal principles that govern the matter, which They lead to the necessary and main intervention of the National Congress.

This is in the interest of the IMF itself, not only because the agreement reached will be extended to the policies developed by future governments (due to its scope, it will cover at least three presidential terms, including the current one), but also because it will validate a debt that – given the speed for the granting of the credit – it would be “loose of papers” in its antecedents. For example, the National Treasury Prosecutor would not have issued a prior opinion, which, as the highest advisor to the Executive Power, guarantees that each external credit taking complies with Argentine standards. And it also interests the political parties, representatives of citizen opinion in Congress, since the solutions to be adopted for the payment of the debt must be fair and sustainable over time.

The primary role in this matter is that of Congress. There are several provisions of the Constitution itself that should be remembered: (i) Article 4, when referring to the formation of the National Treasury, indicates that it includes, among other resources, “… loans and operations decreed by the same Congress for emergencies of the Nation or for companies of national utility ”; (ii) Article 75 –which the 1994 reform kept in its wording in this matter of the Constitution of 1853/60– empowers Congress, by its 4th paragraph, to “contract money loans on the credit of the Nation”, and in its 7th paragraph, to “arrange the payment of the internal and external debt of the Nation”; (iii) subsection 8 authorizes the annual setting of the national budget “based on the general government program and public investment plan”, adding the 1994 reform that must be carried out “in accordance with the guidelines established in the third paragraph of subsection 2 of this article ”(refers to the federal co-participation agreement law, not yet sanctioned); (iv) Regarding the general purposes to comply with external indebtedness, it would be possible to attend to those referred to in article 4 and also to those contemplated in the old “progress clause”, originating in Alberdi –paragraph 18–, supplemented by that of the “new progress” in its section 19, to the protection of human rights – sections 22 and 23 – and Latin American or continental integration – section 24 -, added in the 1994 reform.

Throughout the nineteenth century and much of the twentieth century, Congress used its powers through three models of legislative techniques: a) prior authorization to the Executive Power to arrange foreign debt or issue securities to meet it, setting repayment conditions and types of debt. interest; b) approval by law of agreements signed that implemented debt settlements; c) authorization to extinguish foreign debt through the production of certain resources (the references can be seen in my article “Constitutional and legal bases of the public debt restructuring process”, LL 2004 – A, and on page www.garcialema.com.ar ).

It was only in the 1970s that a practice spread in which the Executive Power approved loans of the external public debt, invoking certain legislative delegations contained in the Organic Charter of the Central Bank, or based on the Law of Ministries, or established in the permanent budget law. It was argued, during the 1980s, that the annual budget laws validated the debt taken by including interest services and capital installments.

However, this situation changed in the 90s, first due to the enactment of Law 24,156 – Financial Administration and Control Systems of the National Public Sector – which establishes the prohibition, for entities of the national administration, of formalize public credit operations not contemplated in the annual budget law or in a special law (article 60), admitting only the delegation in the Executive Power to restructure public debt, to the extent that it implies an improvement of the amounts, terms and / or or interests of the original operations (article 65); and, secondly, by the constitutional reform of 1994, which prohibited legislative delegation, allowing it exceptionally in certain matters of administration or public emergency, and provided that Congress establishes the term of duration, the bases of the delegation (that is, the specific purposes that sustain it) and control by the Permanent Bicameral Commission that created the reform (articles 76 and 99, paragraph 3 of the Constitution).

As if all this were not enough to affirm the powers of Congress, Law 27,612, enacted in 2021, provided in Article 2 that “… any financing program or public credit operation carried out with the International Monetary Fund (IMF) , as well as any increase in the amounts of these programs or operations, will require a law of the Honorable Congress of the Nation that expressly approves it ”.

These constitutional and legal principles oblige the coalitions and political parties, of the government and of the opposition, to agree on the economic terms of the debt restructuring “program” with the IMF, without pretending that the allegedly ungrateful terms that it may contain result responsibility of a single such coalition or party.

Finally, this “program” must ensure respect for the rights established in the Constitution amended in 1994, which allow “economic progress with social justice”, as summarized and developed in the aforementioned Article 75, paragraph 19. Otherwise, this coincides with the provisions of Amendment XIV, Sec. 4, of the Constitution of the United States (1868), which states that “the validity of the public debt of the United States, authorized by law …” may not be challenged.

And it adds, in its final part: but neither the United States nor any State will recognize or pay any debt contracted to support insurrections or rebellions against the United States, nor any claim for the loss or emancipation of slaves, all debts, obligations and obligations must be considered. or claims of that origin as illegal and void.

And already Thomas M. Cooley (in his “General Principles of Constitutional Law of the United States”, p. 58. Bs. As, Peuser, 1898), pointed out that the dominant idea was that slavery was itself the cause of the civil war, with all its losses and calamities, no just claim being able to arise from it. This precedent of justice, in the management of public debt, supports a principle of constitutional law of the United States that has been extended in the 20th century inspiring international declarations and human rights treaties, to which the 1994 reform gave constitutional rank.


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