economy IMF

Argentina's Economy in Ruins -- Thanks to the IMF

Argentina's People Power Crisis

Just a few simple principles of justice would bring great economic prosperity to Argentina. Instead, the people have been suffering for generations.

After its famous failures in Asia in 1997, the IMF (International Monetary Fund) next concentrated on Argentina and appears to have ruined its economy to an even greater degree.

Our thanks to Share International Media Services for the following article.

by Carmen Font

Argentina's slide into chaos has engendered citizens' anger at government, and at judicial and corporate indifference to their needs.

Argentinians took to the streets on the night of 20 December 2001 to protest against the way politicians were dealing with the profound economic recession the country has been wrestling with for years. It was the first time since the 1950s that citizens armed with pots and pans (the cazerolada, a sign of people’s hunger) made a Minister of Finance, Domingo Cavallo, and a President, Fernando de la Rúa, resign. The protests began first in homes, with people hanging out of windows and banging their pans in the capital Buenos Aires. The sound reached the streets and the first groups formed on street corners.

That spontaneous gathering spread like wildfire, through radio channels and the Internet: “Everyone to Cavallo’s place!” was the watchword. In less than one hour, thousands of citizens had assembled before Cavallo’s residence. But people also crammed other districts of Buenos Aires with the same protests, or looted supermarkets in a desperate move. Cavallo was forced to resign that same night and his President De la Rúa (from Partido Radical) followed suit the next day.

The social mobilization brought about a succession of five presidents within just two weeks.

The message of the pans was clear: “We don’t want politicians to cut our salaries,” read an Internet message from an Argentinian appealing to other citizens to attend protests. “We want our national, provincial and local administrative structures reduced by 50 per cent. We don’t want power-hungry politicians who are more worried about winning elections than solving the problems that they have created.... We want to tell these politicians that we are awake and that we won’t accept their irresponsibility any longer.” Messages of this kind extended far beyond the political sector and incriminated the judicial powers and big corporations.

People’s weariness was not unfounded, since the financial and economic system of Argentina was on the verge of collapse. Measures taken by the former Minister Cavallo devalued the remaining bank deposits in the nation and the middle and lower classes had their savings blocked. The $25,623 million in reserves, which in January 2001 backed up the currency convertibility, was reduced to $14,608 million at the end of December 2001. That is, $11,015 million had gone. Before this scenario developed major Argentine companies withdrew most of their deposits in dollars. But then Cavallo ordered regular citizens not to withdraw more than $250 (or pesos) a week from banks. “The US, in the 1930’s depression, lost 20 per cent of its deposits in two or three years. We have lost 24 per cent within six months. This is a measure of the severity of the crisis in Argentina,” said Argentine journalist Joaquin Morales.

Deep in the fabric of Argentine society, however, the crisis had translated into lack of employment, cuts in salaries and pensions, and lack of food for many families. Joblessness tripled between 1991 and 1995 and the unemployment rate in Argentina is now 20 per cent in a population of some 37 million. More than five million people survive below the poverty line.

According to the UNDP (United Nations Development Program) report Democracy in Argentina, the impoverishment of Argentina’s society has been escalating in the last four years. At the root of the many economic problems is Argentina’s debt — it owes $132 billion to the International Monetary Fund (IMF). The new Peronist government of Eduardo Duhalde has ordered the country to default on its debt repayments in order to finance a package of emergency economic reforms to save the country’s collapse. Duhalde declared Argentina was in default, and therefore unable to pay its international debt.

The Argentine Government implemented stark austerity measures in recent months, but did not fulfil the zero deficit demanded by the IMF and in December the latter suspended a package of $1.3 billion in loans. According to international financial rating agency Fitch, Argentina’s default on the debt is the largest default of any debtor nation. Likewise, the government has devalued the peso (pegged for some 10 years now to the dollar) by 28.5 per cent, in an attempt to boost exports and reduce inflation. Other measures involve double compensations for dismissed employees in the next 180 days.

Argentine society, living in a country rich with natural resources, views the new developments with a mixture of hope and distrust, and keeps alert to new social mobilizations, trying not to let their future slip through both foreign and corrupt hands. As an official of the Catholic church in Argentina put it: “Eduardo Duhalde has started his mandate on the right foot, because he has changed the focus of the economic policy. He is promoting national production and employment, instead of continuing with an [IMF-sponsored] transference of resources from the people to the state and beyond.” (Sources: Clarín, La Nación,, Argentina; El País, La Vanguardia.)

Be sure to read Fred Foldvary's editorial Argentina Shows Woes of Land and Money

What's your opinion? Tell your views to The Progress Report:

Your name

Your email address

Check this box if you'd like to receive occasional Economic Justice Updates via email. No more than one every three weeks on average.

Page One Page Two Archive
Discussion Room Letters What's Geoism?

Henry Search Engine