Pathways Through Financial Crisis: Argentina

• Published in: Global governance Vol. 12; no. 4; pp. 465 - 487
• Main Authors: Setser, Brad, Gelpern, Anna
• Format: Journal Article
• Language: English
• Published: Netherlands Brill | Nijhoff 01.10.2006; Lynn Rienner Publishers; Brill; Brill Academic Publishers, Inc
• Subjects: Analysis; Argentina; Bank loans; Banking; Banking crises; Central banks; Convertibility; Currencies; Debt; Debt restructuring; Debts; Economic Crises; Economic crisis; Economic Policy; External debt; Financial crisis; Financial economics; Financial Support; Forecasts and trends; Government crises; IMF; International Economic Organizations; International financial institutions; International lending; Policy Reform; Recession; Sharing economy; Sovereign debt; Argentina
• ISSN: 1075-2846; 1942-6720
• DOI: 10.1163/19426720-01204009

By the end of 2001, Argentina faced economic recession, a collapse in its banking system, and an external sovereign debt crisis. While preemptive action earlier in the year might have made one or more of these crises less severe, preemption was a political orphan at home and abroad. The country's long-standing relationship with the International Monetary Fund brought with it a mutual dependence: the IMF had come to embrace Argentina as a symbol of the success of its policy advice, and Argentina had come to rely on the IMF's endorsement and occasional financial support to navigate the choppy international markets. That relationship deepened along with Argentina's growing difficulties in the run-up to default. IMF support was used to put off a correction of the overvalued currency and to postpone a major debt restructuring. A new Argentine policy regime—and a new, more adversarial relationship with the IMF—emerged only after devaluation and default.