1998–2002 Argentine great depression

Economic disaster November 2019 December 2012 thumb|GDP per capita in Argentina from 1998 to 2005 The 1998–2002 Argentine great depression was an economic depression in Argentina, which began in the third quarter of 1998 and lasted until the second quarter of 2002.Argentina Since Default: The IMF and the Depression http://www.cepr.net/documents/publications/argentina_2002_09_03.htm Center for Economic and Policy Research 23 September 2013 Alan B. Cibils Mark Weisbrot Debayani Kar 3 September 2002 But this approach has failed for more than four years, as the economy remains mired in a depression, with a loss of more than 20 percent of GDP since the last business cycle peak in 1998.(...) Furthermore, the crisis was not caused by fiscal profligacy: the worsening of the central government's fiscal balance from 1993 to 2002 was not a result of increased government spending (other than interest payments). Rather, there was a decline in government revenue due to the recession, which began in the third quarter of 1998. More importantly, Argentina got stuck in a debt spiral in which higher interest rates increased the debt and the country’s risk premium, which led to ever higher interest rates and debt service until its default in December 2001. The interest rate shocks came from outside, starting with the US Federal Reserve’s decision to raise short-term rates in February 1994, and on through the Mexican, Asian, Russian, and Brazilian financial crises (1995–1999).(...)GDP has declined at a record 16.3 percent annual rate in the first quarter of 2002. Unemployment stands at 21.5 percent of the labor force, and real monthly wages have declined by 18 percent over the course of the year. Official poverty and indigence rates have reached record levels: 53% of Argentines now live below the official poverty line, while 25% are indigent (basic needs unmet). Since October 2001, 5.2 million Argentines have fallen below the poverty line, while seven out of ten Argentine children are poor today.(...)While this is the worst economic crisis in Argentine history, there are a number of reasons to view the economy as poised for a rapid recovery, and one that can take place without external financing. Most importantly, Argentina is running a large current account and trade surplus. Primarily a result of the devaluation, the export sector has vastly expanded as a share of the economy (see below), and is considerably more competitive internationally.(...)The second major private outflow, which coincides with the Asian, Russian, and Brazilian crises, sent the economy into a recession from which it has never recovered.Argentina's Economic Crisis: Causes and Cures http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=5fbf2f91-6cdf-4e70-8ff2-620ba901fc4c Joint Economic Committee United States Congress 23 September 2013 Jim Saxton Jim Saxton Washington, D.C. June 2003 In 1998, Argentina entered what turned out to be a four-year depression, during which its economy shrank 28 percent. https://web.archive.org/web/20131029202048/http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=5fbf2f91-6cdf-4e70-8ff2-620ba901fc4c 29 October 2013 liveArgentina's collapse: Scraping through the great depression https://www.economist.com/the-americas/2002/05/30/scraping-through-the-great-depression 23 September 2013 30 May 2002 The Economist Rosario, Argentina https://web.archive.org/web/20131020133246/http://www.economist.com/node/1154506 20 October 2013 liveSchuler Kurt Ignorance and Influence: U.S. Economists on Argentina's Depression of 1998–2002 http://econjwatch.org/articles/ignorance-and-influence-us-economists-on-argentina-s-depression-of-1998-2002 Intellectual Tyranny of the Status Quo Econ Journal Watch 23 September 2013 234–278 August 2005 https://web.archive.org/web/20131225042148/http://econjwatch.org/articles/ignorance-and-influence-us-economists-on-argentina-s-depression-of-1998-2002 25 December 2013 liveWhat Can We Learn from the 1998–2002 Depression in Argentina? http://www.econ.umn.edu/~tkehoe/papers/argentina.pdf Federal Reserve Bank of Minneapolis 23 September 2013 Timothy J. Kehoe Minneapolis 1, 5 Abstract in 1998–2002, Argentina experienced what the government described as a "great depression" (...) Although it started more slowly than the U.S. Great Depression, the 1975–90 great depression in Argentina lasted longer and resulted in a larger deviation in output from potential as measured by the 2 percent growth path. Figure 2 shows that between 1974 and 1990, real output per working-age person fell by almost 44 percent compared to the 2 percent growth path, with a decline of almost 25 percent in the first decade. Notice that this economic performance was horrible even ignoring the trend—real output per working-age person fell 23 percent, making the period 1975–90 in Argentina a great depression by any reasonable definition. Over the period 1990–98, except for a brief downturn in 1995 associated with the Tequila Crisis, Argentina boomed, with cumulative growth almost 17 percent more than the 2 percent growth path (37 percent ignoring the trend). Starting in 1998, however, Argentina entered yet another great depression, with real output per working-age person falling by more than 29 percent by 2002, compared to the 2 percent growth path (23 percent ignoring the trend). As noted by the Argentine government in the earlier quotation, the decline was particularly severe in 2001 and 2002.Pascoe Thomas Britain is following Argentina on the road to ruin The Telegraph 2 October 2012 http://blogs.telegraph.co.uk/finance/thomaspascoe/100020478/britain-is-following-argentina-on-the-road-to-ruin/ https://web.archive.org/web/20121004232627/http://blogs.telegraph.co.uk/finance/thomaspascoe/100020478/britain-is-following-argentina-on-the-road-to-ruin/ dead 4 October 2012 In 1998, Argentina entered what was to become a savage depression. Like Britain, it had previously been a poster boy for free-market capitalism. (...) As in Britain, the crisis of 1998–2002 was predominantly one of debt. It began once credit markets froze – in Argentina's case this followed currency crises in Russia and Brazil which spooked the market. Argentina's crisis ought to have been a shallow one. Instead, a series of spectacular misjudgments ensured that its economy shrank 28pc, the peso fell to a third of its pre-crash value against the dollar, inflation hit 41%, unemployment reached one quarter of the workforce, real wages fell 24pc, and over half of the population fell below the poverty line. London It followed fifteen years of stagnation and a brief period of free-market reforms. The depression, which began after the Russian and Brazilian financial crises, caused widespread unemployment, riots, the fall of the government, a default on the country's foreign debt, the rise of alternative currencies and the end of the peso's fixed exchange rate to the US dollar. The economy shrank by 28 per cent from 1998 to 2002. In terms of income, over 50 per cent of Argentines lived below the official poverty line and 25 per cent were indigent (their basic needs were unmet); seven out of ten Argentine children were poor at the depth of the crisis in 2002. By the first half of 2003, GDP growth had returned, surprising economists and the business media,Weisbrot Mark Sandoval Luis October 2007 Argentina's Economic Recovery CEPR 2 September 2012 https://www.scribd.com/christos_koulis/d/67930261-Argentina-s-Economic-Recovery https://web.archive.org/web/20220607120510/http://es.scribd.com/doc/67930261/Argentina-s-Economic-Recovery 7 June 2022 Argentina's current economic expansion is now more than five and a half years old, and has far exceeded the expectations of most economists and the business media. Despite a record sovereign debt default of $100 billion in December 2001 and a financial collapse, the economy began growing just three months after the default and has enjoyed uninterrupted growth since then. live Simpson on Sunday: Argentinians summon up the ghost of Peron in hard times https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366140/Simpson-on-Sunday-Argentinians-summon-up-the-ghost-of-Peron-in-hard-times.html The Telegraph 23 December 2001 https://web.archive.org/web/20120421064305/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366140/Simpson-on-Sunday-Argentinians-summon-up-the-ghost-of-Peron-in-hard-times.html 21 April 2012 2 September 2012 London live and the economy grew by an average of 9% for five years.Pegasus, Merrill Lynch Create Argentina Property Fund https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaFc0Yxaqjgk&refer=news 23 September 2013 27 December 2006 Eliana Raszewski Daniel Helft Bloomberg Buenos Aires Residential property prices in Argentina have gained an average of 60 percent since 2002, lifted by four straight years of economic growth of more than 8.5 percent, said Armando Pepe, founder of the country's Real Estate Chamber. The central bank predicts growth next year of 7.5 percent. Argentina's economy shrunk by 11 percent in 2002, its worst recession ever, after the country defaulted on $95 billion of bonds in late 2001. https://web.archive.org/web/20131029205651/http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaFc0Yxaqjgk&refer=news 29 October 2013 livePasternak Carla Argentina: Reviving Economy With Rare Combination of Yields and Growth http://seekingalpha.com/article/234826-argentina-reviving-economy-with-rare-combination-of-yields-and-growth Seeking Alpha 23 September 2013 4 November 2010 The nation produced five straight years of +9% GDP growth through 2007, and even managed to eke out gains during the global recession. https://web.archive.org/web/20131029202828/http://seekingalpha.com/article/234826-argentina-reviving-economy-with-rare-combination-of-yields-and-growth 29 October 2013 live Argentina's GDP exceeded pre-crisis levels by 2005, and Argentine debt restructuring that year resulted in resumed payments on most of its defaulted bonds; a second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, though holdout lawsuits led by vulture funds remained ongoing.https://fas.org/sgp/crs/row/R41029.pdf Argentina's Defaulted Sovereign Debt: Dealing with the "Holdouts" J.F.Hornbeck Congressional Research Service 6 February 2013https://dealbook.nytimes.com/2013/02/25/banks-fear-court-ruling-in-argentina-bond-debt/?_r=0 Banks Fear Court Ruling in Argentina Bond Debt The New York Times 25 February 2013 Bondholders who participated in the restructuring have been paid punctually and have seen the value of their bonds rise.http://www.globalpolicy.org/social-and-economic-policy/the-world-economic-crisis/general-analysis-2/51203-billionaire-hedge-funds-snub-90-returns.html Billionaire Hedge Funds Snub 90% Returns Drew Benson Bloomberg News Argentina repaid its International Monetary Fund loans in full in 2006,http://www.pagina12.com.ar/diario/elpais/1-60572-2005-12-16.html Todo en un pago y chau al Fondo Página/12 16 December 2005 es but had a long dispute with the 7% of bond-holders left.Argentina Takes Its Debt Case to the U.S. Supreme Court https://dealbook.nytimes.com/2014/02/25/argentina-takes-its-debt-case-to-the-u-s-supreme-court/ 24 March 2014 The New York Times 25 February 2014 Steven M. Davidoff https://web.archive.org/web/20140225230846/http://dealbook.nytimes.com/2014/02/25/argentina-takes-its-debt-case-to-the-u-s-supreme-court/ 25 February 2014 bot: unknown In April 2016 Argentina came out of the default when the new government decided to repay the country's debt, paying the full amount to the vulture/hedge funds.https://www.infobae.com/2016/04/22/1806314-la-argentina-salio-del-default-el-juez-thomas-griesa-levanto-las-cautelares/ La Argentina salió del default: el juez Thomas Griesa levantó las cautelares infobae 2 October 2017 Origins Economic history of Argentina Argentina's many years of military dictatorship (alternating with weak, short-lived democratic governments) had already caused significant economic problems prior to the 2001 crisis, particularly during the self-styled National Reorganization Process in power from 1976 to 1983. A right-wing executive, José Alfredo Martínez de Hoz, was appointed Economy Minister at the outset of the dictatorship, and a neoliberal economic platform centered around anti-labour, monetarist policies of financial liberalization was introduced. Budget deficits jumped to 15% of GDP as the country went into debt for the state takeover of over $15 billion in private debts as well as unfinished projects, higher defense spending, and the Falklands War. By the end of the military government in 1983, the foreign debt had ballooned from $8 billion to $45 billion, interest charges alone exceeded trade surpluses, industrial production had fallen by 20%, real wages had lost 36% of their purchasing power, and unemployment, calculated at 18% (though official figures claimed 5%), was at its highest point since the 1929 Great Depression.http://edant.clarin.com/suplementos/especiales/2006/03/24/l-01164108.htm El derrumbe de salarios y la plata dulce Clarín 24 March 2006 9 July 2014 https://web.archive.org/web/20111103204724/http://edant.clarin.com/suplementos/especiales/2006/03/24/l-01164108.htm 3 November 2011 dead Democracy was restored in 1983 with the election of President Raúl Alfonsín. The new government intended to stabilize the economy and in 1985 introduced austerity measures and a new currency, the Argentine austral, the first of its kind without peso in its name. Fresh loans were required to service the $5 billion in annual interest charges, however, and when commodity prices collapsed in 1986, the state became unable to service this debt.https://www.nber.org/chapters/c8925.pdf Developing Country Debt and Economic Performance, Volume 2 NBER Dornbusch, Rudiger de Pablo, Juan Carlos 1990 During the Alfonsin administration, unemployment did not substantially increase, but real wages fell by almost half to the lowest level in fifty years. Prices for state-run utilities, telephone service, and gas increased substantially.President Raul Alfonsin, admitting failure Orlando Sentinel 2 May 1988 http://articles.orlandosentinel.com/1988-05-02/news/0030440075_1_cooking-and-heating-telephone-rates-president-raul-alfonsin https://web.archive.org/web/20130522062434/http://articles.orlandosentinel.com/1988-05-02/news/0030440075_1_cooking-and-heating-telephone-rates-president-raul-alfonsin dead 22 May 2013 Confidence in the plan, however, collapsed in late 1987, and inflation, which had already averaged 10% per month (220% per year) from 1975 to 1988, spiraled out of control. Inflation reached 200% for the month in July 1989, peaking at 5000% for the year. Amid riots, Alfonsín resigned five months before the end of his term; Carlos Menem took office in July. 1990s After a second bout of hyperinflation, Domingo Cavallo was appointed Minister of the Economy in January 1991.Argentina Economy Chief Reuters https://www.nytimes.com/1991/01/30/business/argentina-economy-chief.html The New York Times 30 January 1991 https://web.archive.org/web/20130524005235/http://www.nytimes.com/1991/01/30/business/argentina-economy-chief.html 24 May 2013 dead On 1 April, he fixed the value of the austral at 10,000 per US dollar.Plan by New Argentine Economy Chief Raises Cautious Hope for Recovery Nathaniel C. Nash https://www.nytimes.com/1991/04/28/world/plan-by-new-argentine-economy-chief-raises-cautious-hope-for-recovery.html The New York Times 28 April 1991 14 March 2011 Australs could be freely converted to dollars at banks. The Central Bank of Argentina had to keep its US dollar foreign-exchange reserves at the same level as the cash in circulation. The initial aim of such measures was to ensure the acceptance of domestic currency because after the 1989 and 1990 hyperinflation, Argentines had started to demand payment in US dollars. This regime was later modified by a law (Ley de Convertibilidad) that restored the Argentine peso as the national currency. The convertibility law reduced inflation sharply, preserving the value of the currency. That raised the quality of life for many citizens, who could again afford to travel abroad, buy imported goods or ask for credit in dollars at traditional interest rates. The fixed exchange rate reduced the cost of imports, which produced a flight of dollars from the country and a massive loss of industrial infrastructure and employment in industry. Argentina, however, still had external public debt that it needed to roll over. Government spending remained too high, and corruption was rampant October 2025. Argentina's public debt grew enormously during the 1990s without showing that it could service the debt. The IMF kept lending money to Argentina and extending its payment schedules. Reports indicate that tax evasion and money transfers to offshore banks played a role in capital outflows. A congressional committee started investigations in 2001 over accusations that Central Bank Governor Pedro Pou, a prominent advocate of dollarization, and members of the board of directors had overlooked money laundering within Argentina's financial system. Clearstream was accused of being instrumental in this process. Other Latin American countries, including Mexico and Brazil (both important trade partners for Argentina) faced economic crises of their own, leading to mistrust of the regional economy. The influx of foreign currency provided by the privatization of state companies had ended. After 1999, Argentine exports were harmed by the devaluation of the Brazilian real against the dollar. A considerable international revaluation of the dollar directly weakened the peso relative to Argentina's trading partners: Brazil (30% of total trade flows) and the eurozone (23% of total trade flows). After having grown by over 50% from 1990 to 1998, Argentina's GDP declined by 3% in 1999 and the country entered what became a three-year-long recession. President Fernando de la Rúa was elected in 1999 on a reform platform that nevertheless sought to maintain the peso's parity with the dollar. He inherited a country with high unemployment (15%), lingering recession, and continued high levels of borrowing. In 1999, economic stability became economic stagnation (even deflation at times), and the economic measures taken did nothing to avert it. The government continued its predecessor's economic policies. Devaluing the peso by abandoning the exchange peg was considered political suicide and a recipe for economic disaster. By the end of the century, complementary currencies had emerged. In a 2001 interview, journalist Peter Katel identified three factors that converged "the worst possible time" that made the Argentine economy unravel: The fixed exchange rate between the Argentine peso and the US dollar decided by Cavallo. The large amounts of borrowing by Menem. An increase in debt from reduced tax revenues.Argentina's Crisis Explained http://www.time.com/time/world/article/0,8599,189393,00.html TIME Daniel Luna 20 December 2001 https://web.archive.org/web/20120901065627/http://www.time.com/time/world/article/0,8599,189393,00.html 1 September 2012 2 September 2012 dead Currency The 2002 crisis of the Argentine peso, however, shows that even a currency board arrangement cannot be completely safe from a possible collapse. When the peso was first linked to the U.S. dollar at parity in February 1991 under the Convertibility Law, initial economic effects were quite positive: Argentina's chronic inflation was curtailed dramatically and foreign investment began to pour in, leading to an economic boom. Over time, however, the peso appreciated against the majority of currencies as the U.S. dollar became increasingly stronger in the second half of the 1990s. A strong peso hurt exports from Argentina and caused a protracted economic downturn that eventually led to the abandonment of the peso-dollar parity in 2002. This change, in turn, caused severe economic and political distress in the country. The unemployment rate rose above 20 per cent and inflation reached a monthly rate of about 20 per cent in April 2002. In contrast, Hong Kong was able to successfully defend its currency board arrangement during the Asian financial crisis, a major stress test for the arrangement. Although there is no clear consensus on the causes of the Argentine crisis, there are at least three factors that are related to the collapse of the currency board system and ensuing economic crisis: The lack of fiscal discipline Labour market inflexibility Contagion from the financial crises in Russia and Brazil. While the currency crisis is over, the debt problem has not been completely resolved. The government of Argentina ceased all debt payments in December 2001 in the wake of persistent recession and rising social and political unrest. In 2004, the Argentine government made a 'final' offer amounting to a 75 per cent reduction in the net present value of the debt. Foreign bondholders rejected this offer and asked for an improved offer. In early 2005, bondholders finally agreed to the restructuring, under which they took a cut of about 70 per cent on the value of their bond holdings.Cheol S. Eun Bruce G. Resnick International Financial Management, 6th Edition 2013 The McGraw-Hill Companies, Inc., China Machine Press Beijing 57–58 978-7111408543 While the provinces of Argentina had always issued complementary currency in the form of bonds and drafts to manage shortages of cash, the scale of such borrowing reached unprecedented levels during this period. They became called "quasi-currencies", the strongest of them being Buenos Aires's Patacón. The national government issued its own quasi-currency, the LECOP. The Crédito also emerged in 1995 as a complementary currency for facilitating barter.http://www.time.com/time/world/article/0%2C8599%2C199474%2C00.html Argentina: The Post-Money Economy Katel Peter 5 February 2002 Time Time Magazine 23 May 2025 https://web.archive.org/web/20020209003614/http://www.time.com/time/world/article/0,8599,199474,00.html 9 February 2002 Some versions of Crédito were unique for being demurrage currency.May 2025 Rates, riots, resignations and default When a short boom in the early 1990s of portfolio investment from abroad ended in 1995, Argentina became reliant on the IMF to provide the country with low-interest access to credit and to guide its economic reforms. When the recession began in 1999, the national deficit widened to 2.5% of GDP, and its external debt surpassed 50% of GDP. Seeing the levels as excessive, the IMF advised the government to balance its budget by implementing austerity measures to sustain investor confidence. The De la Rúa administration implemented $1.4 billion in cuts in its first weeks in office in late 1999. In June 2000, with unemployment at 14% and projections of 3.5% GDP for the year, austerity was furthered by $938 million in spending cuts and $2 billion in tax increases. GDP growth projections proved to be overly optimistic (instead of growing, real GDP shrank 0.8%), and lagging tax receipts prompted the government to freeze spending and cut retirement benefits again. In early November, Standard & Poor's placed Argentina on a credit watch, and a treasury bill auction required paying 16% interest (up from 9% in July, the second-highest rate of any country in South America at the time.https://www.nytimes.com/2000/11/09/business/argentina-wobbly-clears-a-borrowing-hurdle.html?src=pm Argentina, Wobbly, Clears a Borrowing Hurdle The New York Times 9 November 2000 Clifford Krauss Rising bond yields forced the country to turn to major international lenders, such as the IMF, the World Bank, and the US Treasury, which would lend to the government below market rates if it complied with conditions. Several more rounds of belt-tightening followed. José Luis Machinea resigned in March 2001.The events that triggered Argentina's crisis https://news.bbc.co.uk/2/hi/business/1721103.stm BBC News 21 December 2001 https://web.archive.org/web/20140422075341/http://news.bbc.co.uk/2/hi/business/1721103.stm 22 April 2014 liveKrauss Clifford Mired in Recession, Argentina Is Reshuffling Cabinet https://www.nytimes.com/2001/03/06/business/mired-in-recession-argentina-is-reshuffling-cabinet.html?pagewanted=print&src=pm The New York Times 6 March 2001 https://web.archive.org/web/20130929034626/http://www.nytimes.com/2001/03/06/business/mired-in-recession-argentina-is-reshuffling-cabinet.html?pagewanted=print&src=pm 29 September 2013 dead He was replaced with Ricardo López Murphy,In Argentina, a Surgeon without a Scalpel http://www.businessweek.com/stories/2001-03-18/in-argentina-a-surgeon-without-a-scalpel Bloomberg Businessweek 18 March 2001 https://web.archive.org/web/20130929135101/http://www.businessweek.com/stories/2001-03-18/in-argentina-a-surgeon-without-a-scalpel 29 September 2013 dead who lasted less than three weeks in office before being replaced with Cavallo. Standard and Poor's cut the credit rating of the country's bonds to B− in July 2001.https://www.telegraph.co.uk/finance/economics/2725873/Markets-quiver-as-IMF-fears-Argentina-will-default.html Markets quiver as IMF fears Argentina will default George Trefgarne The Telegraph 13 July 2001 London https://web.archive.org/web/20140105013625/http://www.telegraph.co.uk/finance/economics/2725873/Markets-quiver-as-IMF-fears-Argentina-will-default.html 5 January 2014 live Cavallo reacted by offering bondholders a swap: longer-term, higher-interest bonds would be exchanged for bonds due in 2010. The "megaswap" (megacanje), as Cavallo referred to it, was accepted by most bondholders, and it delayed up to $30 billion in payments that would have been due by 2005;http://www.infojusnoticias.gov.ar/nacionales/cavallo-el-unico-procesado-por-el-megacanje-1399.html Cavallo, el único procesado por el Megacanje Infojus Noticias 4 September 2013 9 July 2014 14 July 2014 https://web.archive.org/web/20140714153103/http://www.infojusnoticias.gov.ar/nacionales/cavallo-el-unico-procesado-por-el-megacanje-1399.html dead but it also added $38 billion in interest payments in the out years; of the $82 billion in bonds that eventually had to be restructured (triggering a wave of holdout lawsuits), 60% were issued during the 2001 megaswap.http://www.pagina12.com.ar/diario/ultimas/20-249690-2014-06-29.html De la Rúa: El megacanje no fue malo para el país Página/12 29 June 2014 Cavallo also attempted to curb the budget crisis by instituting an unpopular across-the-board pay cut in July of up to 13% to all civil servants and an equivalent cut to government pension benefits, De la Rúa's seventh austerity roundhttps://www.theguardian.com/world/2001/dec/09/globalisation.argentina Argentina hits rock bottom Sophie Arie The Observer The Guardian 9 December 2011 London https://web.archive.org/web/20120621085559/http://www.guardian.co.uk/world/2001/dec/09/globalisation.argentina 21 June 2012 live—triggering nationwide strikes,http://articles.sun-sentinel.com/2001-07-20/news/0107200099_1_strike-austerity-argentina Strike Over Austerity Measures Shuts Down Argentina for a Day Sun Sentinel 20 July 2001 https://web.archive.org/web/20130927113757/http://articles.sun-sentinel.com/2001-07-20/news/0107200099_1_strike-austerity-argentina 27 September 2013 dead and from August, it paid salaries of the highest-paid employees in IOUs instead of money. That further depressed the weakened economy, the unemployment rate rose to 16.4% in August 2001http://www.wsws.org/articles/2001/aug2001/lab-a21.shtml Workers Struggles: The Americas World Socialist Web Site 21 August 2001 29 November 2011 Argentina's unemployed number 2.3 million, 16.4 percent of the workforce. https://web.archive.org/web/20120315145605/http://wsws.org/articles/2001/aug2001/lab-a21.shtml 15 March 2012 live up from a 14.7% a month earlier, and it reached 20% by December. Public discontent with the economic conditions was expressed in the nationwide election. De la Rúa's alliance lost its majority in both chambers of Congress. Over 20% of voters chose to give blank or defaced ballots rather than indicate support of any candidate.https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1359611/Angry-vote-tops-Argentina-poll.html Angry vote tops Argentina poll Sophie Arie The Telegraph 16 October 2001 London https://web.archive.org/web/20131003060624/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1359611/Angry-vote-tops-Argentina-poll.html 3 October 2013 live The crisis intensified when, on 5 December 2001, the IMF refused to release a US$1.3 billion tranche of its loan, citing the failure of the Argentine government to reach its budget deficit targets,https://www.nytimes.com/2001/12/11/business/argentina-scrambles-for-imf-loans.html?pagewanted=print Argentina Scrambles for I.M.F. Loans Clifford Krauss The New York Times 11 December 2001 https://web.archive.org/web/20130929034507/http://www.nytimes.com/2001/12/11/business/argentina-scrambles-for-imf-loans.html?pagewanted=print 29 September 2013 live and it demanded budget cuts, 10% of the federal budget.https://www.nytimes.com/2001/12/10/world/imf-gives-budget-cut-order-to-argentina.html I.M.F. Gives Budget-Cut Order to Argentina The New York Times 10 December 2001 On 4 December, Argentine bond yields stood at 34% over U.S. treasury bonds, and, by 11 December, the spread jumped to 42%.Argentine bonds slump to new lows David Litterick https://www.telegraph.co.uk/finance/economics/2744359/Argentine-bonds-slump-to-new-lows.html The Telegraph 4 December 2001 London https://web.archive.org/web/20131003060614/http://www.telegraph.co.uk/finance/economics/2744359/Argentine-bonds-slump-to-new-lows.html 3 October 2013 livehttps://www.telegraph.co.uk/finance/economics/2745217/Argentina-bond-yields-hit-42pc.html Argentina bond yields hit 42pc David Litterick 11 December 2001 The Telegraph London https://web.archive.org/web/20131003055102/http://www.telegraph.co.uk/finance/economics/2745217/Argentina-bond-yields-hit-42pc.html 3 October 2013 live By the end of November 2001, people began withdrawing large sums of dollars from their bank accounts, turning pesos into dollars, and sending them abroad, which caused a bank run. On 2 December, the government enacted measures, informally known as the corralito,El 'corralito' asfixia la economía argentina Carlos Ares http://www.elpais.com/articulo/internacional/corralito/asfixia/economia/argentina/elpepiint/20020116elpepiint_7/Tes El País 16 February 2002 14 March 2011 es The "corralito" suffocates the Argentine economy https://web.archive.org/web/20111210123810/http://www.elpais.com/articulo/internacional/corralito/asfixia/economia/argentina/elpepiint/20020116elpepiint_7/Tes 10 December 2011 liveLa Corte Suprema dictó nuevas medidas en favor del corralito es The Supreme Court ruled out new measures backing the corralito http://www.lanacion.com.ar/365732-cacerolazo-en-la-plaza-de-mayo La Nación DyN 10 January 2002 13 March 2011 https://web.archive.org/web/20110629141232/http://www.lanacion.com.ar/365732-cacerolazo-en-la-plaza-de-mayo 29 June 2011 live which allowed for only minor sums of cash to be withdrawn, initially $250 a week.Argentina Limits Withdrawals as Banks Near Collapse Clifford Krauss https://www.nytimes.com/2001/12/03/world/argentina-limits-withdrawals-as-banks-near-collapse.html The New York Times 3 December 2001 29 November 2011 December 2001 riots and political turmoil December 2001 riots in Argentina The bank withdrawal freeze led to widespread protests, particularly in Buenos Aires. They engaged in protests known as cacerolazoOtro amplio cacerolazo en la ciudad http://www.lanacion.com.ar/365864-otro-amplio-cacerolazo-en-la-ciudad La Nación 11 January 2002 13 March 2011 es Another large cacerolazo in the city https://web.archive.org/web/20140407080333/http://www.lanacion.com.ar/365864-otro-amplio-cacerolazo-en-la-ciudad 7 April 2014 liveNuevo cacerolazo contra la Corte Suprema es New cacerolazo against the Supreme Court http://www.lanacion.com.ar/365644-nuevo-cacerolazo-contra-la-corte-suprema DyN La Nación 10 January 2002 13 March 2011 https://web.archive.org/web/20140407080311/http://www.lanacion.com.ar/365644-nuevo-cacerolazo-contra-la-corte-suprema 7 April 2014 liveCacerolazo en la Plaza de Mayo es Cacerolazo in Plaza de Mayo http://www.lanacion.com.ar/365732-cacerolazo-en-la-plaza-de-mayo La Nación 11 January 2002 13 March 2011 https://web.archive.org/web/20110629141232/http://www.lanacion.com.ar/365732-cacerolazo-en-la-plaza-de-mayo 29 June 2011 live (banging pots and pans). Initially peaceful, these demonstrations later involved damage to property, including banks and foreign-owned companies, particularly those from the United States and Europe.Otro cacerolazo terminó con incidentes es Another cacerolazo ended up in incidents http://www.lanacion.com.ar/362847-otro-cacerolazo-termino-con-incidentes La Nación 29 December 2001 13 March 2011 https://web.archive.org/web/20140407080336/http://www.lanacion.com.ar/362847-otro-cacerolazo-termino-con-incidentes 7 April 2014 liveBancos y comercios destrozados después del cacerolazo http://www.lanacion.com.ar/365869-bancos-y-comercios-destrozados-despues-del-cacerolazo DyN La Nación 11 January 2002 13 March 2011 es Banks and shops destroyed after a cacerolazo https://web.archive.org/web/20140407080308/http://www.lanacion.com.ar/365869-bancos-y-comercios-destrozados-despues-del-cacerolazo 7 April 2014 liveDoce policías heridos, más de 30 detenidos y negocios atacados http://www.lanacion.com.ar/362851-doce-policias-heridos-mas-de-30-detenidos-y-negocios-atacados DyN La Nación 29 December 2001 13 March 2011 es Twelve police hurt, more than 30 arrested and shops attacked https://web.archive.org/web/20140407080319/http://www.lanacion.com.ar/362851-doce-policias-heridos-mas-de-30-detenidos-y-negocios-atacados 7 April 2014 live thumb|260px|Amid rioting, President Fernando de la Rua resigned on 21 December 2001. Confrontations between the police and citizens became common, and fires were set on Buenos Aires avenues. De la Rúa declared a state of emergency,Argentina in 'state of siege' after riots Sophie Arie Buenos Aires The Telegraph https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1365897/Argentina-in-state-of-siege-after-riots.html 20 December 2001 29 November 2011 https://web.archive.org/web/20140104133015/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1365897/Argentina-in-state-of-siege-after-riots.html 4 January 2014 live but the situation worsened, precipitating the violent protests of 20 and 21 December 2001 in Plaza de Mayo, where clashes between demonstrators and the police ended up with several people dead and precipitated the fall of the government.Argentina collapses into chaos Uki Goni Buenos Aires https://www.theguardian.com/world/2001/dec/21/argentina.ukigoni The Telegraph 21 December 2001 29 November 2011 https://web.archive.org/web/20120621085626/http://www.guardian.co.uk/world/2001/dec/21/argentina.ukigoni 21 June 2012 liveThe night Argentina said 'enough' https://news.bbc.co.uk/2/hi/americas/1720915.stm BBC News 20 December 2001 29 November 2011 https://web.archive.org/web/20131203114744/http://news.bbc.co.uk/2/hi/americas/1720915.stm 3 December 2013 live De la Rúa eventually fled the Casa Rosada in a helicopter on 21 December.Argentine president resigns https://news.bbc.co.uk/2/hi/americas/1722584.stm BBC News 21 December 2001 13 March 2011 https://web.archive.org/web/20131203104038/http://news.bbc.co.uk/2/hi/americas/1722584.stm 3 December 2013 live Following the presidential succession procedures established in the Constitution of Argentina, the Senate chairman was next in the line of succession in the absence of the president and the vice-president.Argentina on the brink of collapse Sophie Arie Buenos Aires The Telegraph https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366007/Argentina-on-the-brink-of-collapse.html 21 December 2001 29 November 2011 https://web.archive.org/web/20131003070651/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366007/Argentina-on-the-brink-of-collapse.html 3 October 2013 live Accordingly, Ramón Puerta took office as a caretaker head of state, and the Legislative Assembly (a joint session of both chambers of Congress) was convened.New President fights to unite nation Sophie Arie The Telegraph https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366088/New-President-fights-to-unite-nation.html 22 December 2001 29 November 2011 London https://web.archive.org/web/20131003072206/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366088/New-President-fights-to-unite-nation.html 3 October 2013 liveRenunció De la Rúa: el peronista Puerta está a cargo del Poder Ejecutivo es De la Rúa resigned: Peronist Puerta is in charge of the Executive Branch La Nación http://www.lanacion.com.ar/361035-renuncio-de-la-rua-el-peronista-puerta-esta-a-cargo-del-poder-ejecutivo 21 December 2001 29 November 2011 https://web.archive.org/web/20131225164528/http://www.lanacion.com.ar/361035-renuncio-de-la-rua-el-peronista-puerta-esta-a-cargo-del-poder-ejecutivo 25 December 2013 live Adolfo Rodríguez Saá, the governor of San Luis Province, was eventually appointed as the new interim president.Argentina's new president vows not to devalue Andrew Graham-Yooll The Telegraph https://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366145/Argentinas-new-president-vows-not-to-devalue.html 23 December 2001 29 November 2011 London https://web.archive.org/web/20131003062131/http://www.telegraph.co.uk/news/worldnews/southamerica/argentina/1366145/Argentinas-new-president-vows-not-to-devalue.html 3 October 2013 live Debt default During the last week of 2001, the administration defaulted on the larger part of the public debt, US$132 billion, a seventh of all the money borrowed by the Third World. Politically, the most heated debate involved the date of the following elections. Proposals ranged from March 2002 to October 2003, the end of De la Rúa's term.November 2011 Rodríguez Saá's economic team came up with a scheme designed to preserve the convertibility regime, dubbed the "Third Currency" Plan. It consisted of creating a new, non-convertible currency, the Argentino, that would coexist with convertible pesos and US dollars. It would circulate as cash, or but not in checks, promissory notes, or other instruments, which could be denominated in pesos or dollars. It would be partially guaranteed with federally managed land to counterbalance inflationary tendencies. Argentines having legal status would be used to redeem all complementary currency already in circulation; their acceptance as a means of payment was quite uneven. It was hoped that convertibility would restore public confidence, and the non-convertible nature of this currency would allow for a measure of fiscal flexibility (unthinkable with pesos) to ameliorate the crippling recession. Critics called the plan merely a "controlled devaluation" but its advocates countered that since controlling a devaluation is perhaps its thorniest issue, that criticism was a praise in disguise. The plan had enthusiastic supporters among mainstream economists (the most well-known being perhaps Martín Redrado, a former Banco Central de la República Argentina president) citing technical arguments. However, it was not implemented because the Rodríguez Saá government lacked the required political support. Rodriguez Saá lost the support of his own Justicialist Party and resigned before the end of the year. The Legislative Assembly convened again, appointing Peronist Senator Eduardo Duhalde of Buenos Aires Province, who had been the runner-up in the 1999 race for the presidency. End of fixed exchange rate Corralón thumb|250px|Monthly inflation in Argentina during 2002 (the peak was 10.4%, in April). In January 2002, after much deliberation, Duhalde abandoned the fixed exchange rate that had been in place for ten years. In a matter of days, the peso lost a large part of its value in the unregulated market. A provisional "official" exchange rate was set at 1.4 pesos per US dollar. In addition to the corralito, the Ministry of Economy dictated the pesificación; all bank accounts denominated in dollars would be converted to pesos at an official rate. Deposits would be converted at 1.40 ARS per dollar and debt was converted on 1 to 1 basis.https://www.lanacion.com.ar/economia/se-pone-en-marcha-el-proceso-de-compensacion-a-los-bancos-nid428917/ Se pone en marcha el proceso de compensación a los bancos 6 September 2002 20 December 2021 The exchange rate spiked as depositors converted their peso deposits back into US dollars.https://www.lanacion.com.ar/economia/el-dolar-libre-no-detuvo-su-marcha-y-toco-los-4-pesos-nid408497/ El dólar libre no detuvo su marcha y tocó los 4 pesos 26 June 2002 20 December 2021 By October 2002, depositors who withdraw lost 50% of their value in dollars.https://www.lanacion.com.ar/economia/ahorristas-el-inicio-de-la-resignacion-o-la-vuelta-de-la-confianza-nid438068/ Ahorristas: el inicio de la resignación o la vuelta de la confianza 6 October 2002 20 December 2021 That angered most savings holders and attempts were made to declare it unconstitutional.La redolarización de los depósitos 25 December 2002 20 December 2021 https://www.lanacion.com.ar/editoriales/la-redolarizacion-de-los-depositos-nid461206/ After a few months, the exchange rate was mostly a floating exchange rate. The peso further depreciated, which prompted increased inflation. Argentina depended heavily on imports but then could not replace them locally. Inflation and unemployment worsened during 2002. The exchange rate had reached nearly 4 pesos per dollar, and the accumulated inflation since the devaluation was about 80%, considerably less than predicted by most orthodox economists. The quality of life of the average Argentine was lowered proportionally. Many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis. Since the supply of pesos did not meet the demand for cash (even after the devaluation), complementary currencies kept circulating alongside them. Fears of hyperinflation as a consequence of devaluation quickly eroded their attractiveness. Their acceptability now ultimately depended on the state's irregular willingness to take them as payment of taxes and other charges. While the regional currency was frequently accepted at the same value as the peso, Entre Ríos Province's Federal fared among the worst, discounted by an average 30% as even the provincial government that had issued them was reluctant to accept them. There were also frequent rumors that the first state would banish complementary currency overnight, leaving their holders with useless printed paper. Immediate effects thumb|250px|Depositors protest the freezing of their accounts, mostly in dollars. They were converted to pesos at less than half their new value. Aerolíneas Argentinas was one of the most affected Argentine companies, canceling all international flights for various days in 2002. The airline came close to bankruptcy but survived. July 2015 Several thousand homeless and jobless Argentines found work as cartoneros, cardboard collectors. An estimate in 2003 had 30,000 to 40,000 people scavenging the streets for cardboard to sell to recycling plants. Such desperate measures were common because of the unemployment rate, nearly 25%.Accommodating an army of garbage pickers http://www.cnn.com/2003/WORLD/americas/03/26/argentina.train.reut CNN.com 26 March 2003 13 June 2014 https://web.archive.org/web/20040518155809/http://www.cnn.com/2003/WORLD/americas/03/26/argentina.train.reut/ 18 May 2004 live Argentine agricultural products were rejected in some international markets for fear that they might have been damaged by the chaos. The US Department of Agriculture put restrictions on Argentine food and drug exports.July 2015 Recovery thumb|350px|Evolution of the Argentine GNP, 1999–2004. thumb|350px|Foreign currency reserves of Argentina's central bank, in millions of US dollars. Duhalde eventually stabilised the situation somewhat and called for elections. On 25 May 2003, Néstor Kirchner took office as the new president. Kirchner kept Duhalde's Minister of Economy, Roberto Lavagna. Lavagna, a respected economist with centrist views, showed a considerable aptitude at managing the crisis, with the help of heterodox measures. The economic outlook was completely different from that of the 1990s. The devalued peso made Argentine exports cheap and competitive abroad and discouraged imports. In addition, the high price of soybeans in the international market produced massive amounts of foreign currency; China became a major buyer of Argentina's soy products. The government encouraged import substitution and accessible credit for businesses, staged an aggressive plan to improve tax collection, and allocated large sums for social welfare but controlled expenditure in other fields.https://www.imf.org/External/spring/2007/imfc/statement/eng/arg.pdf Statement by Ms. Felisa Miceli Minister of Economy and Production Argentina Miceli, Felisa 14 April 2007 IMF The peso slowly rose, reaching a 3-to-1 rate to the dollar. Agricultural exports grew and tourism returned. The huge trade surplus ultimately caused such an inflow of dollars that the government was forced to begin intervening to keep the peso from rising further, which would have adversely affected budget balances by limiting export tax revenues and discouraged further reindustrialisation. The central bank started rebuilding its dollar reserves. By December 2005, foreign currency reserves had reached $28 billion (they were later reduced by the payment of the full debt to the IMF in yes 2006 1). The downside of this reserve accumulation strategy is that US dollars had to be bought with freshly issued pesos, which risked inflation. The Central Bank sterilized its purchases by buying Treasury letters. In this way the exchange rate stabilised to about 3:1. thumb|250px|President Kirchner and Economy Minister Lavagna discuss policy, August 2004. The currency exchange issue was complicated by two opposing factors: a sharp increase in imports since 2004, which raised the demand for dollars, and the return of foreign investment, which brought fresh currency from abroad, after the successful restructuring of about three-quarters of the external debt. The government set up controls and restrictions aimed at keeping short-term speculative investment from destabilising financial markets. The country faced a potential debt crisis in late July 2014, when a New York judge ordered Argentina to pay hedge funds the full interest on bonds it had swapped at a discount rate during 2002. If the judgement proceeded, Argentina argued, the country would become insolvent and have a second debt default.Hectic efforts on by Argentina to avoid second default http://www.argentinanews.net/index.php/sid/224277893/scat/d9ed072d737073b4/ht/Hectic-efforts-on-by-Argentina-to-avoid-second-default 31 July 2014 Argentina News.Net https://web.archive.org/web/20140808062248/http://www.argentinanews.net/index.php/sid/224277893/scat/d9ed072d737073b4/ht/Hectic-efforts-on-by-Argentina-to-avoid-second-default 8 August 2014 dead Argentina's recovery suffered a minor setback in 2004, when rising industrial demand caused a short-lived energy crisis. Argentina continued to grow strongly, however, and GDP jumped 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007. Though wages averaged a 17% annual increase from 2002 to 2008, and rising 25% in the year to May 2008,Ministerio de Economía y Producción – República Argentina https://web.archive.org/web/20131019024050/http://www.mecon.gov.ar/ 19 October 2013 Citation not specific June 2014 inflation ate away at the increases: 12.5% in 2005; 10% in 2006; nearly 15% in 2007, and over 20% during 2008.December 2010 The government was accused of manipulating inflation statistics, and The Economist began to turn to private sources instead.https://www.economist.com/leaders/2014/06/20/dont-lie-to-me-argentina Official statistics: Don't lie to me, Argentina The Economist 25 February 2012 22 April 2013 https://web.archive.org/web/20130307233906/http://www.economist.com/node/21548242 7 March 2013 live The surveying volume prompted the government to increase export tariffs and to pressure retailers into one price freeze after another in a bid to stabilize prices but with little effect. While unemployment has been considerably reduced (it has hovered around 7% since 2011), Argentina has so far failed to reach an equitable distribution of income. Nevertheless, economic recovery after 2002 was accompanied by significant improvements in income distribution: in 2002, the richest 10% absorbed 40% of all income, compared to 1.1% for the poorest 10% (36 times);http://data.worldbank.org/indicator/SI.DST.10TH.10 Income share held by highest 10% The World Bank but by 2013, the former received 27.6% of income, and the latter, 2% (14 times).http://tiempo.infonews.com/2014/06/25/argentina-127013-ligera-mejora-en-la-distribucion-del-ingreso.php Ligera mejora en la distribución del ingreso Tiempo Argentino 14 June 2014 dead https://web.archive.org/web/20140705054334/http://tiempo.infonews.com/2014/06/25/argentina-127013-ligera-mejora-en-la-distribucion-del-ingreso.php 5 July 2014 That level of inequality compares favorably to levels in most of Latin America and, in recent years, the United States as well. Living standards recovered significantly after growth resumed in 2003. Even using private inflation estimates, real wages rose by around 72% from their low point, in 2003, to 2013.http://tiempo.infonews.com/2014/01/21/argentina-117133-el-poder-adquisitivo-crecio-72-desde-2003.php El poder adquisitivo creció 72% desde 2003 Tiempo Argentino 21 January 2014 dead https://web.archive.org/web/20140125062712/http://tiempo.infonews.com/2014/01/21/argentina-117133-el-poder-adquisitivo-crecio-72-desde-2003.php 25 January 2014 Argentina's domestic new auto market recovered especially quickly from a low of 83,000 in 2002 (a fifth the levels of the late 1990s) to a record 964,000 in 2013.http://www.adefa.com.ar/v2/index.php?option=com_content&view=article&id=179%3Ainforme-industria-diciembre-2013&catid=58%3Anovedades&Itemid=120&lang=en Informe Industria, diciembre 2013 ADEFA dead https://web.archive.org/web/20140111062154/http://www.adefa.com.ar/v2/index.php?option=com_content&view=article&id=179%3Ainforme-industria-diciembre-2013&catid=58%3Anovedades&Itemid=120&lang=en 11 January 2014 Cooperatives During the economic collapse, many business owners and foreign investors sent their money overseas. As a result, many small and medium enterprises closed for lack of capital. The majority of their workers, faced with a sudden loss of employment and no source of income, decided to reopen the closed facilities on their own as self-managed cooperatives.Benjamin Dangl, 'Occupy, Resist, Produce: Worker Cooperatives in Argentina' http://upsidedownworld.org/coops_arg.htm https://web.archive.org/web/20131029220734/http://upsidedownworld.org/coops_arg.htm 29 October 2013 Horizontalism: Voices of Popular Power in Argentina, by Marina Sitrin Worker cooperatives include the factory Zanon (FaSinPat), the four-star Hotel Bauen, the suit factory Brukman, and the printing press Chilavert. In some cases, former owners sent police to remove workers from the workplaces; that was sometimes successful but in other cases, workers defended occupied workplaces against the state, the police, and the bosses. A survey by an Buenos Aires newspaper found that around a third of the population had participated in general assemblies. The assemblies used to take place in street corners and public spaces, and they generally discussed ways of helping each other in the face of eviction, or organizing around issues such as health care, collective food buying, or food distribution programs. Some created new structures of health care and schooling. Neighborhood assemblies met once a week in a large assembly to discuss issues that affected the larger community.http://www.americaspolicy.org/citizen-action/series/12-factories.html Americas Program Citizen Action in the Americas Worker-Run Factories: From Survival to Economic Solidarity Americaspolicy.org 9 November 2009 https://web.archive.org/web/20080706163814/http://www.americaspolicy.org/citizen-action/series/12-factories.html 6 July 2008 dead In 2004, The Take, a documentary, was released on the assemblies. Effects on wealth distribution Although GDP grew consistently and quickly after 2003, it did not reach the levels of 1998, the last year before the crisis, until late 2004. Other macroeconomic indicators followed suit. A study by Equis, an independent counseling organization, found out that two measures of economic inequality, the Gini coefficient and the wealth gap between the 10% poorest and the 10% richest among the population, grew continuously from 2001 to March 2005. + Poverty in Argentina Date of measurement Extreme poverty Under poverty line May 200111.6%35.9% October 200113.6%38.3% May 200224.8%53.0% October 200227.5%57.5% May 200326.3%54.7% 2nd sem 200320.5%47.8% 1st sem 200417.0%44.3% 2nd sem 200415.0%40.2% 1st sem 200513.6%38.5% 2nd sem 200512.2%33.8% 1st sem 200611.2%31.4% 2nd sem 2006 8.7%26.4% 2nd sem 2007 5.9%20.6% 1st sem 2008 5.1%17.8% 2nd sem 2008 4.4%15.3%The adjacent table shows statistics of poverty in Argentina, in per cent of the population. The first column shows the date of the measurement (note that the method and time changed in 2003; poverty is now measured each semester). Extreme poverty is here defined as not having enough money to eat properly. The poverty line is set higher: it is the minimum income needed for basic needs including food, clothing, shelter, and studies. Similar statistics are available from the World Bank.http://data.worldbank.org/indicator/SI.POV.URHC Poverty headcount ratio at urban poverty line (% of urban population) Data Table Data.worldbank.org 22 April 2013 https://web.archive.org/web/20131030065155/http://data.worldbank.org/indicator/SI.POV.URHC 30 October 2013 live Debt restructuring Argentine debt restructuring When the default was declared in 2002, foreign investment stopped, and capital flow ceased almost completely and immediately. The government faced severe challenges in trying to refinance its debt. The government reached an agreement in 2005 by which 76% of the defaulted bonds were exchanged for other bonds at a nominal value of 25 to 35% of the original and at longer terms. A second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, but some creditors have still not been paid. Foreign currency denominated debt thus fell as a percentage of GDP from 150% in 2003 to 8.3% in 2013. Criticism of IMF The IMF accepted no discounts in its part of the Argentine debt. Some payments were refinanced or postponed on agreement. However, IMF authorities at times expressed harsh criticism of the discounts and actively lobbied for the private creditors. In a speech before the United Nations General Assembly on 21 September 2004, Kirchner said, "An urgent, tough, and structural redesign of the International Monetary Fund is needed, to prevent crises and help in [providing] solutions." Implicitly referencing the fact that the intent of the original Bretton Woods system was to encourage economic development, Kirchner warned that the IMF today must "change that direction, which took it from being a lender for development to a creditor demanding privileges". During the weekend of 1–2 October 2004, at the annual meeting of the IMF/World Bank, leaders of the IMF, the European Union, the Group of Seven industrialised nations, and the Institute of International Finance (IIF), warned Kirchner that Argentina had to come to an immediate debt-restructuring agreement with creditors, increasing its primary budget surplus to slow debt increases and imposing structural reforms to prove to the world financial community that it deserved loans and investment. In 2005, after turning its primary surplus into an actual surplus, Argentina began paying the IMF on schedule, with the intention of regaining financial independence. On 15 December 2005, following a similar action by Brazil, Kirchner suddenly announced that Argentina would pay the whole debt to the IMF. The debt payments, totaling US$9.810 billion, were previously scheduled as instalments until 2008. Argentina paid it with the central bank's foreign currency reserves. The payment was made on 6 January 2006.El Central recuperó las reservas del pago al Fondo Monetario La Nación 27 September 2006 http://www.lanacion.com.ar/844220-el-central-recupero-las-reservas-del-pago-al-fondo-monetario The Central recovered the reservations of the payment to the Monetary Fund es https://web.archive.org/web/20140328121944/http://www.lanacion.com.ar/844220-el-central-recupero-las-reservas-del-pago-al-fondo-monetario 28 March 2014 live In a June 2006 report, a group of independent experts hired by the IMF to revise the work of its Independent Evaluation Office (IEO) stated that the assessment of the Argentine case suffered from manipulation and lack of collaboration on the part of the IMF; the IEO is claimed to have unduly softened its conclusions to avoid criticizing the IMF's board of directors.https://www.brettonwoodsproject.org/2006/06/art-539118/ Committee questions independence of IMF's evaluation arm 30 June 2006 Bretton Woods Project en-US Films Social Genocide (Memoria del Saqueo), by Fernando "Pino" Solanas A Lucky Day (Un Día de suerte) The Take Nine Queens (Nueve Reinas) Heroic Losers See also Argentina 1998 in Argentina 1999 in Argentina 2000 in Argentina 2001 in Argentina 2002 in Argentina Piquetero Popular assemblies South American economic crisis of 2002 Argentine debt restructuring References 30em http://www.ipsnews.net/2013/08/argentina-seeks-to-restructure-debt-held-by-vulture-funds/ Argentina Seeks to Restructure Debt Held by Vulture Funds Marcela Valente IPS News 29 August 2013 https://web.archive.org/web/20201124103928/http://www.ipsnews.net/2013/08/argentina-seeks-to-restructure-debt-held-by-vulture-funds/ 24 November 2020 https://www.nytimes.com/2001/12/21/opinion/argentina-unraveling.html?pagewanted=print Argentina Unraveling 21 December 2001 The New York Times Argentina's banking scandal deepens BBC News https://news.bbc.co.uk/2/hi/americas/1182417.stm 21 February 2001 https://web.archive.org/web/20051215091051/http://news.bbc.co.uk/1/hi/world/americas/1182417.stm 15 December 2005 live https://www.telegraph.co.uk/finance/economics/2730980/Argentines-cry-over-fast-food-currency.html Argentines cry over 'fast food currency' Simon English The Telegraph 22 August 2001 London https://web.archive.org/web/20131003072200/http://www.telegraph.co.uk/finance/economics/2730980/Argentines-cry-over-fast-food-currency.html 3 October 2013 live https://www.economist.com/unknown/2001/07/13/dont-cry-for-me Don't cry for me... 13 July 2001 The Economist After three years of recession, Argentina's unemployment rate is now 14.7%. https://web.archive.org/web/20131020150243/http://www.economist.com/node/698129 20 October 2013 live Extienden el canje de las Lecop es Exchange of Lecops extended Clarín.com 1 November 2003 http://edant.clarin.com/diario/2003/11/01/p-02501.htm https://web.archive.org/web/20131001054821/http://edant.clarin.com/diario/2003/11/01/p-02501.htm 1 October 2013 24 September 2012 live For Argentina, Inflation and Rage Rise in Tandem James Brooke The New York Times 4 June 1989 https://www.nytimes.com/1989/06/04/weekinreview/the-world-for-argentina-inflation-and-rage-rise-in-tandem.html https://web.archive.org/web/20140613140810/http://www.nytimes.com/1989/06/04/weekinreview/the-world-for-argentina-inflation-and-rage-rise-in-tandem.html 13 June 2014 Argentina Memorandum of Economic Policies 14 February 2000 International Monetary Fund http://www.imf.org/external/np/loi/2000/arg/01/index.htm https://web.archive.org/web/20120423051950/http://www.imf.org/external/np/loi/2000/arg/01/index.htm 23 April 2012 24 September 2012 live One-Day National Strike Freezes Much of Argentina Clifford Krauss The New York Times 10 June 2000 https://www.nytimes.com/2000/06/10/world/one-day-national-strike-freezes-much-of-argentina.html https://web.archive.org/web/20140613141320/http://www.nytimes.com/2000/06/10/world/one-day-national-strike-freezes-much-of-argentina.html 13 June 2014 Party of Peron Loses Its Hold on Argentina Clifford Krauss The New York Times 25 October 1999 https://www.nytimes.com/1999/10/25/world/party-of-peron-loses-its-hold-on-argentina.html https://web.archive.org/web/20140613140102/http://www.nytimes.com/1999/10/25/world/party-of-peron-loses-its-hold-on-argentina.html 13 June 2014 The last tango? https://www.economist.com/finance-and-economics/2001/06/21/the-last-tango 21 June 2001 The Economist https://web.archive.org/web/20131020131124/http://www.economist.com/node/666355 20 October 2013 live Turmoil, Then Hope in Argentina Nathaniel C. Nash https://www.nytimes.com/1991/01/31/business/turmoil-then-hope-in-argentina.html The New York Times 31 January 1991 https://web.archive.org/web/20140613141912/http://www.nytimes.com/1991/01/31/business/turmoil-then-hope-in-argentina.html 13 June 2014 Further reading "Guillermo Nielsen exclusive: Inside Argentina’s financial crisis" An insider's account, by Guillermo Nielsen, until recently the Secretary of Finance in Argentina, about his tenure there and specifically about the fraught negotiations the country had regarding its debt with the IMF, investment banks and bondholders. It goes into detail about the negotiations, the people involved. Euromoney March 2006. Banco Central de la República Argentina (Argentina's central bank website, with various economic statistics available on the fly) Argentina: Life After Default Article looking at how Argentina has recovered from the crisis Video: "Argentina's Economic Recovery: Four Years After the Meltdown" featuring CEPR co-director Mark Weisbrot and former IMF Research Director Michael Mussa, 30 November 2005 A Look at Argentina’s 2001 Economic Rebellion and the Social Movements that Led It – video report by Democracy Now! Bortot, F. (2003). "Frozen Savings and Depressed Development in Argentina". Savings and Development, Vol. XXVII, n. 2. 0393-4551. Argentina and the Fund: from triumph to tragedy Mussa Michael 2002 Peterson Institute Jutta Maute: Hyperinflation, Currency Board, and Bust: The Case of Argentina, (Hohenheimer Volkswirtschaftliche Schriften) (Paperback), Peter Lang Publishing. (2006), 978-0820487083 External links Argentina Didn't Fall on Its Own (Global Exchange) Argentina's debt restructuring: A victory by default? (The Economist) Argentina’s Economic Disaster (The Free Market) How Argentina Got Into This Mess (The Cato Institute) Confiscatory Deflation: The Case of Argentina (Joseph T. Salerno, PhD Professor of Economics) No Tears for Argentina (Antony P. Mueller, PhD Professor of Economics) Report of the External Evaluation of the Independent Evaluation Office (International Monetary Fund) The Crisis that Was Not Prevented: Lessons for Argentina, the IMF, and Globalisation (Jan Joost Teunissen and Age Akkerman) The Empty ATM (PBS, Wide Angle) What went wrong in Argentina? (Steve H. Hanke, PhD Professor of Applied Economics and Kurt Schuler, PhD Economics) Category:1998 in Argentina Category:1999 in Argentina Category:2000 in Argentina Category:2001 in Argentina Category:2002 in Argentina Category:1998 in economic history Category:1999 in economic history Category:2000 in economic history Category:2001 in economic history Category:2002 in economic history Category:History of government debt Category:Economic crises in Argentina Category:Presidency of Carlos Menem Category:Presidency of Fernando de la Rúa Category:Presidency of Eduardo Duhalde Category:Recessions Category:Turn of the 3rd millennium