Argentinean economic crisis

One of the causes of the crisis is called the monetarist reforms of Domingo Cavallo , during which state property was privatized and the national currency was pegged to the US dollar ^[3] . In addition, special conditions were created for foreign investors in Argentina - they were completely exempted from taxes for 5–25 years, as a result of which, according to some estimates, multibillion-dollar foreign investment was accompanied by a loss of at least $ 280 billion in profit per decade ^[4] .

A tight binding to an expensive currency (dollar) made Argentine goods uncompetitive, which subsequently negatively affected the development of industry ^[5] . In addition, because of the tight binding, the Central Bank of Argentina deprived itself of the possibility of real influence on the situation ^[5] . After Brazil devalued in 1999, its economy has become more attractive to investors than the Argentinean one. This led to an outflow of capital ^[6] .

In the 1990s, Argentina began to pay off its old debts at the expense of new debts at higher interest rates ^[6] . At the same time, loans were taken to cover the budget deficit. Over the years of the presidency of Carlos Menem and Fernando de la Roi, public debt grew to 132 billion dollars ^[5] , which subsequently led to significant costs for its maintenance. Shortly before default, however, the IMF refused to provide new loans to Argentina. In this regard, the IMF and the US are accused of inconsistency with respect to Argentina, since the IMF has long insisted on a strict budget policy and issued large loans to Argentina to cover the deficit, but at the end of 2001 changed its position ^[7] .

Argentina, which has maintained its peso's fixed rate since 1991, eliminated hyperinflation and provided a significant influx of foreign investment, was then the darling of the fund and received an additional loan of $ 8 billion in the summer of 2001. However, immediately after that, the IMF realized that no additional funds would help Argentina loans. <...> Argentina immediately ceased to be the IMF's favorite, and in December 2001, the fund refused to provide her with the next portion of the aforementioned loan. ^[eight]

Other reasons that contributed to the more severe consequences of the crisis are also called:

• Imperfection of the tax system, which allowed evading taxes (tax evasion amounted to 40%) ^[7] .
• Large-scale corruption ^[7] .
• Debt of the regions to the central government ^[7] .
• High annual current debt payments - $ 5 billion per year ^[7] .
• The global recession and crises in the economies of developing countries (Southeast Asia and Russia), which led to a reduction in GDP and an outflow of capital from Argentina ^{[6] [7]} .
• An unexpected increase in current social benefits despite the fact that a policy of reducing them in the long term was pursued ^[6] .

• October 24, 1999. Fernando de la Roi won the presidential election; Before the election, he promised not to change the neoliberal economic model created under President Carlos Menem ^[9] . Moreover, the country already recorded a high level of unemployment and a huge difference in income between the rich and the poor ^[9] .
• July 12, 2001. Credit agencies lowered the credit rating of Argentina, which led to a worsening situation in the financial markets ^[10] .
• August 2, 2001. Congress cut civil servants' salaries and pensions by 13% as part of the austerity program ^[11] .
• November 3, 2001. Fernando de la Roi announced plans to restructure $ 95 billion of public debt ^[12] .
• December 2, 2001. The government announced the exchange of government bonds for new ones with lower interest obligations and a longer maturity ^[13] .
• December 2/3, 2001. Strict restrictions were introduced on cash withdrawals from bank accounts - $ 250 per week ^{[13] [14]} .
• December 4, 2001. Credit rating agency Fitch assigned Argentina the lowest default credit rating of DDD ^[13] .
• December 6, 2001. The IMF has blocked the allocation of the next tranche of a loan of $ 1.3 billion to Argentina ^[15] .
• December 7, 2001. The government turned to private pension funds on conditions that were regarded as confiscation ^[16] .
• December 12, 2001. Due to loan payments, 1.4 million pensions remained unpaid ^[17] .
• December 19, 2001. Riots take place throughout the country due to the difficult economic situation; the government announces its intention to implement the ninth comprehensive savings program ^[18] .
• December 20, 2001:
  • In riots and clashes with the police , 20 people died ^[19] .
  • A state of emergency has been introduced ^[20] .
  • Minister of Economics Domingo Cavallo resigned ^[21] .
• December 21, 2001:
  • President Fernando de la Roi resigned.
  • Suspended all budgetary currency transactions ^[7] .
• December 23/24, 2001. I. about. President Adolfo Rodriguez Saha announced the largest default in history - 80 billion out of 132 billion dollars of public debt (the default did not apply to Argentine debts of the IMF, the World Bank, the Inter-American Development Bank , and also loans guaranteed by the state) ^[2] .
• November 14, 2002. Argentina was not able to repay another loan, which created the threat of a new default ^[22] .

In the short term, the level of GDP fell sharply in Argentina, the purchasing power of the population decreased significantly, and the level of poverty increased significantly. According to the World Bank, the population below the poverty line in Argentina increased from 28.9% in 2000 to 35.4% in 2001 and peaked in 2002 (54.3%), after which it began to decline and reached 9, 9% in 2010 ^[23] . In 2001, the ratio of external public debt to GDP amounted to 56.9% of GDP, but due to default and falling GDP by 2002, this figure increased to 153.2%, after which it began to decline by 20-40% per year ^{[24 ]} . Since 2001, unemployment has been falling in Argentina (18.3% in 2001, 17.9% in 2002, 16.1% in 2003, and 8.6% in 2009) ^[24] .

To slightly reduce the effect of the crisis on the population, the Argentinean government introduced a differentiated approach to reimbursing deposits, as a result of which banks suffered losses of 6-10 billion dollars ^[7] . The government also refused obligations in a number of infrastructure projects and at the same time banned raising utility tariffs ^[7] . Price control has become one of the most important points of the anti-crisis program ^[7] .

Second Default

According to some media reports, in July 2014, the Argentine Republic was in a state of technical default for the second time since the beginning of the XXI century . The reason was the late late July 30, 2014 expiration of the maturity of debt to a portion of creditors, including the NML Capital Limited funds and Aurelius Capital Management . The amount of non-payment of debts amounted to 1.3 billion dollars ^[25] . The rating agency Fitch in connection with this event lowered the sovereign rating of Argentina to "selective default" ^[26] .

However, President Christina Kirchner denied the declaration of default ^{[27] [28]} , and Minister of Economy Axel Kisillof said that a media campaign “against the Argentina, designed to sow the doubts, panic and fear caused by the word“ default “" ^[26] .

During the collapse of the economy, large businessmen and foreign investors withdrew their capital abroad. As a result, many small and medium-sized businesses were closed due to lack of funds, the unemployment rate increased. The workers of these enterprises lost any income and decided to re-launch the means of production on their own, as self - governing cooperatives . ^{[29] [30]}

The cooperatives included the Zanon Ceramic Factory (known as FaSinPat , abbreviated as "Fabrica sin patrones", "Factory Without Hosts"), the four-star Bauen Hotel, the Brukman Sewing Factory, the Chilavert printing press and many others. In some cases, the former owners called the police, in order to drive the workers away, but often the workers managed to protect the occupied jobs from the state, police and bosses. ^[29]

A survey conducted by the Buenos Aires newspaper found that about 1/3 of the population took part in public meetings (assemblies). They were usually held at street intersections and in public places. The meetings discussed the possibilities of mutual assistance in cases of eviction from apartments, health problems, as well as the collective purchase of food and food distribution programs. Some assemblies subsequently created new health and education structures. Local meetings once a week united in a large assembly to discuss common problems. ^[31] In 2004, a documentary was released about these events .

Some enterprises were bought legally for a nominal value, while others remain occupied and are not subjects of law.

• The economic history of Argentina
• March of empty pots

• Cortes-Conde R. The Economic Crisis in Argentina: Causes and Consequences // Economic History. Review / Ed. L.I. Borodkina. Vol. 10.M., 2005.S. 180-182.
• Tarasov A.N. Argentina - Another IMF Victim
• Trofimov G. Argentine crash - repetition of the past?