The Argentine economic crisis was a situation that affected Argentina's society widely during the late 1990s and early 2000s.

Overview

Argentina had been subject to military rule for many years; during the middle 1980s, democracy in the country was restored.

The new government's plans included stabilizing Argentina's economy. But because of the many expensive endeavors in which the previous government was involved (such as The Falkland Islands War), the government lacked of funds. Because of this, it was forced to borrow money from the IMF by 1989.

The plan seemed to be working at first: by 1991, the Argentine peso was equal in monetary value to the United States dollar. But Argentina had international debts to pay, and it needed to keep borrowing money from the IMF.

Argentina adquired much indeptness during the early 1990s, making the debt numbers hard to overcome. The IMF, however, kept lending Argentina much money, fact which many Argentine citizens blame for the chaos that would later ensue.

As a consequence of all the debts adquired by the Argentine government, the government defaulted on payments of about 100 million dollars to local creditors, forcing the creditors to become unwilling victims of the situation. Because of this, the government had to abandon the system that led the peso to be equal in rate to the American dollar.

By the late 1990s, Argentina's inflation had reached 200 per cent per month. The government then began a plan of trade, liberatisation, deregulation and privatisation.

Part of the problem also lied in the fact that other countries, such as Mexico and Brazil (both of which also happen to be important trade partners for Argentina) had recent economical crises of their own, leading other countries to mistrust Latin American countries money wise.

By 2004, the economy in Argentina was showing slight improvements.

Other areas affected

Many companies were affected by this: Aerolineas Argentinas, for example, was one of the most affected Argentine companies, having to stop all international flights for various days in 2002. The airline seemed on the blink of bankruptcy but it survived.

On the entertainment world, producers of Argentina's largest television channels were forced to produce more reality shows than any other type of shows because these were generally cheap to produce as compared to other shows. As a consequence, many Argentine super-stars had to emigrate to other countries in order to make a living.

Argentina's agriculture was also affected: Argentine products were rejected by many other countries, in fear that they might come damaged because of the poor conditions in which they grew, and the USDA put restrictions on Argentine food and drugs arriving at the United States.

Public Reaction

The public reacted with fear, withdrawing large sums of money from their bank accounts. As a consequence, the government put a limit to the amounts of money that citizens could withdraw, setting the limit to 2,000 dollars monthly.

Riots

Because of the allowance limit, many Argentines became enraged, taking on the streets of important cities, including Buenos Aires, and acting violently. This happened specially during the 2001 and 2002 periods. Violence was directed specially to American companies: Many American stores had windows broken, stolen goods and fires. Billboards of such companies as Coca Cola and others were brought down by the masses. But the violence was not limited only to American companies, as many businesses from other countries were also affected. Confrontations between the police and citizens became a common sight, and fires were also set on many large Buenos Aires avenues.

References

• The Crisis that Was Not Prevented: Lessons for Argentina, the IMF, and Globalisation, Jan Joost Teunissen and Age Akkerman (eds.), Fondad, 2003, book, pdf)