The Argentina debt affected the country between the late 90’s to the early 2000’s and can be attributed to misdiagnosis and ineffective policy. During this time the IMF and Argetina’s government worked closely together. Previous to the crisis Argentina had been celebrated for its economic policies and growth. The government worked to put in place conservative economic policy, including the privatization of companies, looser trade regulations, among other conservative changes. Economic growth in that period appears to have been in large part the result of increasing amount of international debt. Before the end of the 90’s, things began to fall apart.
The crisis can be traced back to the 80’s, where the country experienced extreme hyperinflation. The currency inflated at over 5000% this was during the presidency of Carlos Menem and, his finance minister, Domingo Cavallo who attempted three ways to limit inflation. The first was a stabilization act with the backing of a large private firm; the second attempt was to buy up certificates of deposit into government bonds (Nataraj & Sahoo 2003). After the first two methods failed the third option was introduced, this was to peg the argentine peso to the US dollar. To fixate the exchange rate, the currency board kept up dollar reserves, and could not change the supply of pesos without the same change in dollars as well (Sergio L., Eduardo, & Augusto 2003). By the mid-1990s, inflation had vanished but the government were unable to alter many of the concretionary policies that stabilized inflation yet hurt growth. When debt crisis began to develop, the government could not expand the money supply as a means of stimulating the economy, resulting in stagflation in the 90’s (Macewen 200...
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...e World Bank.
IMF. The IMF and Argentina, 1991–2001. Rep. International Monetary Fund: Independent Evaluation Office, 2004. Web. 24 Apr. 2012. .
Krueger, Anne. "Crisis Prevention and Resolution: Lessons from Argentina." Speech. "The Argentina Crisis" Cambridge, Cambridge. 17 July 2002. IMF. Web. 23 Apr. 2012. .
Macewan, Arthur. "Economic Debacle In Argentina: The IMF Strikes Again." Foreign Policy in Focus Jan. 2002, Latin America & Caribbean sec. Print.
Nataraj, Geethanjali, and Pravakar Sahoo. "Argentina's Crisis: Causes and Consequences." Economic and Political Weekly 38.18 (2003). Print.
Paddock, John V. "IMF Policy and the Argentine Crisis." The University of Miami Inter-American Law Review 34.1 (2003): 155-87. Print.
In early 1994, Fernando Henrique Cardoso was selected as minister of finance, his primary objective was to develop a new stabilization plan. The plan named Real Plan and it focused mainly on the causes of inflation in country. Th...
This paper argues that the Mexican peso crisis of December 20 should have been expected and foreseeable. In the year preceding the crisis, there were several indicators suggesting that the Mexican economy and peso were already under extreme pressure. The economy bubble was ballooning to burst so much so that it was simply a crisis waiting to happen.
These international economic institutions should possess substantial transparency considering their policies directly affect the public. Instead, the IMF and similar institutions have no accountability to the public of which it is supposed to serve. Through lack of transparency, countries with major influence in the IMF such as the U.S. can indirectly impose its own investment agenda upon the country in crisis. If actions of the IMF were directed through a democratic process, more logical and productive policies would develop. If the IMF promotes transparency through the policies it imposes on developing countries, it should set an example through its own governance.
I this paper I am going to compare impacts of liberalization between two countries: Poland and Argentina. Let me first start with Argentina will compare the background, policies and consequences of both the countries. In Poland we say “Don’t praise the day before sunset.” By the early twentieth century Argentina was seventh wealthiest country. According to Jurnal of Latin America Studies “At this time, when the nation boasted one of the highest rates of growth of per capita income, no-one would have dared to question its growth potential. Indeed Argentina’s economic evolution during that period could be compared with that of Australia and Canada.” Today, the country is bankrupt on a scale unprecedented in history. Liberal economy, worshiped there until recently as holiness , bothering recession . Argentina was once the richest countries in the world . Now it is spreading appalling poverty . The unemployment rate in 1991 of 6.5 % has more than tripled .
Ethiopia gets imf loan to cope with global recession. (2009, August 29). Retrieved from http://www.allvoices.com/s/event-4029802/aHR0cDovL3N1ZGFudHJpYnVuZS5jb20vc3BpcC5waHA/YXJ0aWNsZTMyMjcx
“In 1816, the United Provinces of the Rio Plata declared their independence from Spain. After Bolivia, Paraguay, and Uruguay went their separate ways, the area that remained became Argentina. The country's population and culture were heavily shaped by immigrants from throughout Europe, with Italy and Spain providing the largest percentage of newcomers from 1860 to 1930. Up until about the mid-20th century, much of Argentina's history was dominated by periods of internal political conflict between Federalists and Unitarians and between civilian and military factions. After World War II, an era of Peronist populism and direct and indirect military interference in subsequent governments was followed by a military junta that took power in 1976. Democracy returned in 1983 after a failed bid to seize the Falkland Islands (Islas Malvinas) by force, and has persisted despite numerous challenges, the most formidable of which was a severe economic crisis in 2001-02 that led to violent public protests and the successive resignations of several presidents. In January 2013, Argentina assumed a nonpermanent seat on the UN Security Council for the 2013-14 term.” (Central Intelligence Agency)
The financial crisis in Argentina during the late 1990s and early 2000s resulted in severe issues with foreign debt, inflation, unemployment, and political turmoil for the country. Argentina not only suffered a currency crisis, but also suffered a political crisis. Fallout from the economic collapse was so severe the Argentinean population resorted to civil unrest and protest, which in turn exacerbated Argentina’s problems at the turn of the century. While other issues related to this financial crisis such as the impact on the lives of the Argentinean population or the political turmoil and corruption are certainly worthy of discussion, this paper will focus on the currency crisis and the Argentinean government’s role in this economic catastrophe, primarily discussing the relative fiscal policies and external shocks that led up to the crisis in 2001, followed by a brief examination of the governmental reaction and recovery efforts.
Nevertheless, the problem with the IMF is that they come to the table when the damage is already so far gone that they require such drastic cuts to everything, ensuring that the public cannot sustain its way of living, thereby turning on the government that is trying to fix the problem, who as a result, cuts back on the austerity measures. In Greece’s case, the IMF only added to the debt, each time failing to ignite the Greek economy and in this circumstance, exacerbated the situation. The lack of integrity in hiding their true debt, the Greek government didn’t help matters, as well as national pride of both the Greeks and the Germans, borrower and lender. This tragic saga with the dueling prides, caused the IMF to change its lending rules. “If private creditors are simply paid off with IMF money, there is less incentive for a country to pursue reforms needed to improve its debt profile” (Matthew heller, 2016). In other words, they learned a lesson: lending to a state that doesn’t have control over its currency isn’t always the best course of
By the fall of 1981, the Argentinean government under the leadership of General Galtieri and the military junta was experiencing a significant decrease of power. Economical...
Agenor, Pierre-Richard, and Paul Masson. “Credibility, Reputation and the Mexican Peso Crisis”. Journal of Money, Credit and Banking, Vol. 31, No. 1 (1999): 70-84.
Massachusetts Institute of Technology. (2000). The IMF and the World Bank: puppets of the neoliberalism onslaught. Retrieved April 05, 2014, from MIT website: http://www.mit.edu/~thistle/v13/2/imf.html
The 2008 global financial crisis was widely considered the worst economic financial crisis since the 1930’s and the Great Depression. This crisis was a major problem for nation states across the globe and exposed the interdependence that can easily result in a systemic international banking and credit crisis. While the crisis is six years in the past, we are still plagued by many of the long-term effects of the crisis such as extraordinarily high unemployment, austerity measures that decreased government budgets as a method to ensure government solvency, rapidly increasing poverty, and worsening economic inequality, one ramification of all of this has been the growing social and political discontent across Spain.
The Latin American Debt crisis did not occur over night, the crisis was many years in the making and signs of its arrival were prominent in Latin American society. The reasons for its occurrence are also expansive; some fault can also be place in countries outside of Latin America. The growth rate in the real domestic product of many Latin American countries grew at a constantly high rate in the decade prior to the crisis in the 1980s, this growth led to an increase in foreign investment, corporate investment, and the world began supporting these developing nations (Ocampo). The foreign investments into Latin America created a new international financial system that gave the foreign banks access the funds to give massive loans to the developing nations of Latin America. However, the affluence was not continuous. A rise in natural resources occurred in the mid-1970s, which led to increase the prices of imported goods, and thus Latin American countries would have to find a way to pay back these deficits, which then led them to borrowing more money. By the end of the 1970s, Latin America was in debt to for over $150 billion, and the growth rates for each nations debt varied greatly with Mexico and Brazil taking on more than half of the debt themselves.
Many journal articles state that the reversal of the oil prices was the event that really sparked Venezuela’s economic crisis. As well as, years of governmental economic miss management contributed to the start and continuance of Venezuela’s drastic economic catastrophe. Large governmental debt, lead to an excessive amount of printing money which these events then lead the country to a state of
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.