IMF deepens footprint in Latin America, which holds nearly half of all loans

The International Monetary Fund (IMF) has been increasingly involved in Latin America and the Caribbean (LAC), which accounts for nearly half of all IMF loans. Historically, the relationship between the IMF and LAC has been tumultuous, marked by economic crises and debt defaults. However, in recent years, more LAC nations have sought loans from the IMF, particularly following the end of the pandemic and growing geopolitical interest from the United States.

The IMF's presence in LAC is accompanied by the potential for greater alignment with U.S. interests, as suggested by experts. According to a recent report by the liberal think tank IDEAs, 15 of the 83 countries with debt to the IMF are in LAC. This is a significant increase from the eight LAC countries that had a relationship with the IMF in early 2009.

Argentina and Ecuador are the two biggest contributors to this IMF debt, with Argentina's debt being the largest in the Fund's history (US$58 billion). Excluding Argentina, the remainder of LAC's debt (US$74 billion) represents 44% of the total IMF loans. Despite this heavy concentration in just two countries, a significant portion of LAC nations still remain subject to some form of IMF conditionality.

IDEAs director Martín Abeles attributes this to political decisions influenced by U.S. Treasury interests within the IMF's Executive Board. In Argentina's case, the first exceptional loan was approved in 2018 under then-President Mauricio Macri during Donald Trump's presidency, with a further US$20 billion package granted to the Milei administration in 2025. Abeles argues that this has created an "anti-catalytic effect," making it difficult for Argentina and Ecuador to regain access to private capital markets.

The report also highlights that many Latin American countries have adopted IMF-style policy discipline even without active IMF programs, adopting a highly conservative macroeconomic stance characterized by high interest rates, fiscal restraint, and efforts to reassure financial markets. This is seen in countries with Flexible Credit Lines (FCLs), such as Chile, Mexico, and Colombia.

However, Abeles argues that the deeper challenge in LAC is structural transformation, requiring economic diversification, technological upgrading, and stronger domestic productive and technological capabilities.