Does the IMF need to refocus its role after the Argentina crisis?

The IMF alone cannot help troubled states out of a financial hole. Such states need more aid, not more loans

In case you blinked, the Argentine government built up a pile of debt out of almost nothing with surprising speed, and then proceeded to default on it almost as quickly. Compared to the country's slow-motion 2002 default, the latest crisis feels like 60-second Shakespeare. But in both cases, default was inevitable because the country's mix of debt, deficits and monetary policy was unsustainable, and the political class was unable to make the necessary adjustments in time.

In both cases, loans from the International Monetary Fund seemed only to postpone the inevitable, and, worse, to exacerbate the ultimate collapse. So after the second debacle in Argentina in less than a generation, it's high time to ask how to refocus the IMF's mandate for dealing with emerging-market debt crises. How can the IMF be effective in helping countries regain access to private credit markets when any attempt to close unsustainable budget deficits is labelled austerity? The only answer is to increase substantially the resources of international aid agencies (the IMF is a lender). Unfortunately, there seems little appetite for that.

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