Analysis of Argentinean Debt Crisis

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…show more content…
Argentina had difficulties in their ability to shoulder debt so large. For example, Argentina had less capacity to raise tax revenue than industrial countries. Simultaneously the inflow of dollars decreased, lessening the money supply even more, this was do in large part to external factors. It was more vulnerable to external shocks, which in turn lead to low export-to-GDP ratio (Krueger 2002). For example, the US dollar appreciated against other currencies, which caused the peso also to appreciate; this resulted in weakening of demand for Argentine exports (Nataraj