Overture: Argentinian Economic Status and Early Signs of a Crisis to Come
I - In Overture: Argentina – Economic Status & Early Signs of a Crisis to Come:
Today, Argentina is arguably revered as the second largest economy in South America, after Brazil, and even considered as a considerable economic power in the world. That economy has been measured and weighed heftily, mainly due to a transformation of the political system that governs it. Up until 1983, the country was headed by a succession of military regimes, a state of affairs resulting in the economy being brought under the control of the state. Democracy was restored, but economic problems plagued early presidential terms. In the early 1990’s, then president Carlos Menem, adopted a new approach to public economics and put flagstones in place. Hyperinflation was a key problem and, in 1991, Menem addressed this by imposing a peso-dollar fixed exchange rate. He also aligned his plan on the neoliberal Washington platform and aimed to deregulate labor, liberalize trade, and privatize enterprises. This would lead to much spending on the part of the government, but in many respects, and due in great part to the aid from the International Monetary Fund (IMF), Argentina quickly turned into one of the fastest growing economies in the region.
I A- The Collapse:
In December 2001, as well as 2002, the country’s economy completely collapsed; with the result being a financial meltdown. The crisis was mainly due to the collapse of the Argentinean peso after an announcement by the government that it was to suspend the payment of its public debt. Within nine months, spiking inflation levels had reached several hundred percentage points. In parallel, the peso’s decade-long linkage to the US was scrapped, resulting in a sudden depreciation of the peso. A barrage of presidents were elected in less than a year, some not even lasting the week, in the desperate search for a resolution to the crisis. But such a saving grace was not found and the presidents resigned in quick succession.
I B- The
Today, Argentina is arguably revered as the second largest economy in South America, after Brazil, and even considered as a considerable economic power in the world. That economy has been measured and weighed heftily, mainly due to a transformation of the political system that governs it. Up until 1983, the country was headed by a succession of military regimes, a state of affairs resulting in the economy being brought under the control of the state. Democracy was restored, but economic problems plagued early presidential terms. In the early 1990’s, then president Carlos Menem, adopted a new approach to public economics and put flagstones in place. Hyperinflation was a key problem and, in 1991, Menem addressed this by imposing a peso-dollar fixed exchange rate. He also aligned his plan on the neoliberal Washington platform and aimed to deregulate labor, liberalize trade, and privatize enterprises. This would lead to much spending on the part of the government, but in many respects, and due in great part to the aid from the International Monetary Fund (IMF), Argentina quickly turned into one of the fastest growing economies in the region.
I A- The Collapse:
In December 2001, as well as 2002, the country’s economy completely collapsed; with the result being a financial meltdown. The crisis was mainly due to the collapse of the Argentinean peso after an announcement by the government that it was to suspend the payment of its public debt. Within nine months, spiking inflation levels had reached several hundred percentage points. In parallel, the peso’s decade-long linkage to the US was scrapped, resulting in a sudden depreciation of the peso. A barrage of presidents were elected in less than a year, some not even lasting the week, in the desperate search for a resolution to the crisis. But such a saving grace was not found and the presidents resigned in quick succession.
I B- The
Cited: “Annual report on Military Expenditures.” (1998). US Government. http://www.fas.org/irp/world/98_amiex1.html “Argentina Data Profile.” (2004). The World Bank Group. http://devdata.worldbank.org/external/dgprofile.asp?RMDK=82668&SMDK=1&W=0 “Argentina Public Debt.” (2005). The Latin Focus. http://www.latin-focus.com/latinfocus/countries/argentina/argdebt.htm “Argentina Public Finances.” (2005). The Ministry of Economy of Argentina. http://www.mecon.gov.ar/peconomica/basehome/infoeco_ing.html Cavallo, Domingo & Cavallo, Sonia. (1996). “Lessons from the stabilization process in Argentina, 1990-1996.” Moreno, Ramon. (October 18, 2002). “Learning from Argentina’s crisis.” The Federal Reserve Bank of San Francisco