Tanzi said even as the economy was surging, it was clear the budget deficit wasn't sustainable. The government was masking the red ink through one-time sales of state-owned companies, he said.
"The data was hiding how large the deficit was," he said.
That meant as the economy cooled, the deficit would rebound to its earlier levels.
IMF officials say they warned Argentine policy makers about the deficits, but their concerns went unheeded.
To be certain, many analysts blame Argentina's leaders for not doing enough to curb spending and corruption, and they blame investors for ignoring signs of trouble.
Some say that rather than the IMF forcing the government to accept its advice, it was Argentina that was calling the shots, convincing the fund to overlook its economic mismanagement in return for more loans.
Peter Petas, managing director of CreditSights Inc., a New York-based research firm, says the government in Buenos Aires played the IMF so obviously that it prompted an Argentine board game, called The Eternal Debt: Who is Capable of Beating the IMF? Every few months the IMF would review the progress of Argentina, waive conditions the country didn't meet, and approve the next loan installment, said Petas, who was chief emerging-markets strategist at Deutsche Bank Securities from 1997 to 2000.
"The IMF kept perpetuating this notion that Argentina was doing all it was supposed to do," Petas said. Instead, he says, for the past two years, it has been clear the country has been insolvent.
There are signs the IMF is listening to its detractors.
During the past 18 months, the fund's director, Horst Koehler, has spoken of cutting off countries that don't follow sound policies and of the need for governments to make their own decisions, advising them to take "ownership" of their IMF programs.
Harvard University economist Jeffrey Sachs, says the IMF helped Argentina emerge from its hyperinflation of the 1980s and only ran up against its limits this year.
"The fund can be criticized for backing a program that had a weak chance of success, but this is a lesser sin" than imposing draconian spending cuts, Sachs said. And those spending reductions were ordered by the government, not the IMF, he said.
Even the US$8 billion in additional aid the IMF offered in August was intended to send a message that the fund was backing away because it was so clearly inadequate, Sachs said.
"The package said to Argentina: We don't believe this will work, and neither should you," he said.
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