Analysis of Argentinean Debt Crisis: IMF and Government Actions

However, the economy recovered rapidly during 1968 to 1973 with averaging over 10 percent per annum. The GDP also increased at a rate above 5 percent per annum between 1974 and 1980, except for 1978 (see Exhibit 2). However, Brazil had incurred an extremely high level of indebtedness due to the support of this massive development program. The high interest rates on dollar funds and the unwillingness of foreign lenders to advance additional loans caused a deep economic recession in Brazil. Interest rates directly affect the credit market (loans) because higher interest rates make borrowing more costly. As a result, Brazilian government who aimed to balance the payment had to ask the International Monetary Fund (IMF) for funds.

The Ministry of Economy dictated the pesificación, by which all bank accounts denominated in dollars would be converted to pesos at an official rate-at less than half their new value. This measure angered most savings holders and attempts were made to declare it unconstitutional. Here, depositors protest the freezing of their accounts. Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. An estimate in 2003 put the number of people scavenging the streets for cardboard to sell to recycling plants at 30,000 to 40,000 people. Such desperate measures were common given the unemployment rate of 24%. The country defaulted on its $132 billion in debt. After Nestor Kirchner became president in 2003, Argentina was able to renegotiate its debt and pay it off by 2006.

In the novel, the Scarlet Letter, there are four main characters, Hester Prynne, Pearl Prynne, Arthur Dimmesdale, and Roger Prynne Chillingworth. The story goes; Hester Prynne committed the sin of adultery with the minister of their Puritan Community, Arthur Dimmesdale, the community then condemning her to wear the scarlet letter “A” for the rest of her natural life. Pearl Prynne being the product of the two sinners. In the moment, when Hester is completing the first part of her punishment, her long lost husband, Roger Prynne Chillingworth, arrives. Not wanting his arrival acknowledge Roger replaces his maiden name for Chillingworth. This situation creates a whole plot of conflicts both

Most of the evidence gathered in this case seems to be circumstantial. There is no direct evidence, which is ultimately why the charges were dismissed against Pape and Smith, along with the legal issues during the proceedings. The most important piece of evidence has to be the DNA evidence and the phone records. DNA evidence was found connecting Smith to the scene. A business card was near a wheelbarrow that Becky, one of the victims, was found dead in that had DNA matching Smith’s. Also, the business card was for a Catholic ministry, a church Pape’s mother volunteered at. This could not have been a coincidence because the likelihood of a random match is very slim. This DNA evidence was the only forensic evidence found at the time of the

When Christopher Columbus discovered the coast of Venezuela, he thought he had encountered an earthly paradise, today that grace land is ravaged by famine, inflation, scarcity, violence, social and political conflicts; “social implosion [being] driven by economic collapse, caused by shockingly self-destructive policy making” (Toro, 1). Venezuela’s antidemocratic government and its lack of foresight has created a severe economic crisis crumbling health care system and a lack of basic necessities and is jailing innocent people who object.

Sin embargo, a raíz de la crisis económica que sufrió Argentina a finales del 2001. Pecom vio reducidas sus posibilidades de seguir creciendo con la misma dimensión en la que venía operando.

In Nathaniel Hawthorne's short story, Young Goodman Brown, Brown goes on a journey through the forest that drastically changes him. While we never know the real reason why Brown went to the forest, the experience in the forest caused him to become a bitter, sad, and lonely man who couldn't look at life the same after that night. There were many events that occurred in the forest that caused this change in him.

On April 1, 1991, Argentina’s Congress, with Domingo Cavallo as Minister of Economy, enacted the Convertibility Law (or Ley de Convertibilidad) legally adopting the currency board (Hornbeck, 2002). This legislation essentially pegged the Argentinean peso to the U.S. dollar. The government guaranteed the convertibility of the peso to U.S. dollar at a one-to-one exchange rate, limiting the printing of pesos to only those necessary to purchase dollars in the foreign exchange market. Thus, the central bank was required by law to hold foreign reserves to cover its peso liabilities (Hanke and Schuler, 2002). With this fixed exchange rate, the Argentinean government was hoping to preserve the value of their currency and stabilize inflation. The peg was initially successful, as it cured hyperinflation that occurred at the end of the 1980s and provided price stability needed for economic growth in the early 1990s. However, by the late 1990s,

In addition, in the decade leading to 1994, the government saw an increasing expenditure for various projects in the country. The result was an increased reduction in the funds of the government. Another more important factor was that the country experienced hyperinflation from 1985 through 1993. This period was also characterized by significant increases in debt loads of the financial sector, as well as the low oil prices that also contributed to the weakening of the Mexican economy (Mathur, 18). One would argue that the Mexican

The reforms caused a period of success followed by worse conditions. These policies made the rich get richer and the poor get poorer. Towards the end of the 1990s the country experienced rising unemployment and decreasing wages. The privatization of industries in addition to the international debt and government corruption led to many citizens distrusting the government and failure to pay taxes thus keeping the problems still at large. Unfortunately, the fragile Argentine economic infrastructure, while seemingly strong, was not able to withstand the downturn in the world economy after the severe correction of the both the Dow Jones Industrial Average and NASDAQ stock markets in the United States in March 2000 and the terror attacks of September 11, 2001. The widespread economic failure caused the Argentine peso to become devalued and this caused extreme inflation in prices. In June of 2002 the peso was valued at just $0.26 of a U.S. dollar. The unemployment rates skyrocketed as well hitting over 25% in most parts of the country and the poverty rate increased from 30% in 1999 to over 50% in 2002. The benefits of globalization in Argentina were short-lived but still vital in the countries development.

Now it must be mentioned that Maduro, instead of changing tack upon the death of Chavez, doubled-down on the latter’s policies and, in many cases, initiated economic policies that have further exasperated the crisis. As a result of having depleting government reserves, Maduro slashed imports including basic good like groceries and medical supplies – this was done in order to avoid having to default on foreign debt. Moreover, Maduro also made the grave mistake of responding to the impending crisis by printing money, which has caused inflation to skyrocket and exasperated the situation even further by making basic goods unaffordable. These policies coupled together have led to food shortages which have even led to food riots. While the economic policies of Chavez created the current crisis, those of Maduro has made the crisis far worse. The two men, quite simply, personified economic populism, relying on “the creation of a material base for the public’s support and the distribution of favors to constituents,” all whilst paying little heed to financial constraints (Cordova Cazar and Lopez-Bermudez 2009,

During this time period the IMF took on a new role of lending to countries on the brink of default. By the mid 1980s, some observers noted that the loan qualifying austerity policies implemented by many borrowers were prolonging and deepening the debtor nations’ problems.

With the large capital surplus largely arising from foreign investments to support the huge trade deficits in the Mexican current account, all seemed to go well for the Mexican economy until several political crises erupted and several macroeconomics mistakes were left exposed in 1994 which affected foreign investor’s confidence.

Food, transport cost, gasoline and home energy are some of the products that increased in cost due to the oil dilemma. Another cause is the reliance on credit as a means of financing one’s life. Many people have increasingly been addicted on credit cards and other credit facilities causing a strain of the financial capabilities of a person. The application of mortgages and loans increased sharply in the past decade and with many people not meeting their monthly payments, interest rates rose up and people were are less able to pay the periodical amounts required of them. The final cause that will be highlighted is the falling dollar value. This has the effect of reducing the purchasing value of many citizens. Many homeowners lost money in the form of inflation due to the increasing devaluation of the dollar. There are many other numerous reasons given for the crisis all of which worked together to escalate the problem all over the country and also to some countries elsewhere in the world.

The readily identification of debt crisis was Mexico’s inability to serve its outstanding debt of $80 billion debt. And the situation continue to worsen, and one year later, by October 1983, 27 countries owing $239 billion had reschedule debts or in the process of doing so.