María Belén Wu is from Buenos Aires, Argentina. She graduated in 2019 from Johns Hopkins SAIS with a concentration in Latin American Studies and specializations in International Finance and Emerging Markets. María Belén now serves as a Country Risk Analyst at J.P. Morgan in New York, focusing on Latin America and Western Europe. She thanks her SAIS mentor, Professor Monica de Bolle, for providing her an invaluable education on the topics covered in this article.
The views and opinions expressed in this article are the author’s own and do not necessarily represent those of J.P. Morgan or the SAIS faculty.
Que el mundo fue y será una porquería, ya lo sé.
En el quinientos seis y en el dos mil, también.
Que siempre ha habido chorros, maquiavelos y estafaos, contentos y amargaos, barones y dublés.
– Cambalache, Enrique Santos Discépolo, 1934
Introduction
Discépolo did not live long enough to see the turn of the century, but his tango lyrics still rang true in Argentines’ ears on December 1st 2001, as irate crowds held up signs that read “ladrones devuelvan los dólares” (thieves return the dollars) and “Fondo de Miseria Interna” (Internal Misery Fund), alluding to the Spanish acronym for the International Monetary Fund (IMF).
The relationship between Argentina and the IMF defines much of contemporary Argentine economic history. When the last lending agreement expired in 2006, Argentina had by then spent 38 of the preceding 50 years (the country joined the IMF in 1956) operating under an IMF program. The Argentine case illustrates the elusive nature of sovereign debt crises: they are difficult to identify, prevent, and resolve efficiently. Argentina’s abundant experience with debt-related crises is exemplary for emerging markets in many ways, and the country is credited—or rather, burdened—with many superlatives: highest hyperinflation, most fixed exchange rate system, largest sovereign debt default, highest interest rates, and largest IMF loan recipient. The root of each historical crisis episode in Argentina was fundamentally fiscal, and therefore Argentina’s debt dynamics are relevant for the current environment of currency volatility and emerging market turmoil.
In June 2018, the IMF approved Argentina’s request for a US$50 billion Stand-By Arrangement (SBA), and increased the loan principal to US$57 billion in October 2018.[1] The latest Debt Sustainability Analysis (DSA) carried out by the IMF concludes that Argentina’s current debt profile is “sustainable but not with high probability,”[2] revealing persistent vulnerabilities that will present significant challenges to the country’s ongoing attempt at fiscal consolidation and economic recovery. Furthermore, while the IMF DSA expresses a mildly negative outlook on Argentina’s debt, there are several political economy constraints that, when considered, reveal an even more delicate balance between fiscal consolidation and political viability in Argentina.
Dictatorship, Democracy and Debt
From the beginning, the IMF’s relationship with Argentina was strained and tainted by memories of Argentina’s military dictatorship. In 1946, President Juan Domingo Perón, the founder of the Justicialist workers’ party –also known thereafter as the Peronist party– received an invitation for Argentina to join the Fund as a member country, but he declined and called the organization an “imperialist spawn.”[3] It was not until after the Revolución Libertadora overthrew Perón in the military coup of 1955 that Argentina officially joined the Fund, with the military forcing the government of Arturo Frondizi to impose an austerity program aimed at privatization and multilateralism, two prerequisites for admittance to the IMF.
Since 1958, Argentina has engaged in continuous precautionary borrowing from the IMF in the form of Stand-By Arrangements (SBAs), a lending facility designed to address member countries’ short-term balance of payments problems with a typical duration ranging from twelve to thirty-six months (see Appendix 1).[4] Throughout the 1950s up to the early 1970s, as the country experienced a long-lasting commodity and credit boom, Argentina maintained a reasonable level of debt with the Fund, drawing less than or equal to 10 million SDRs (US$13.9 million) per year from the SBAs in select years to cover government financing needs and meeting repayment schedules in a timely manner. With the return of power to President Héctor José Cámpora of the Justicialist Party and subsequently Perón once again in 1973, Argentina ceased to engage in further SBAs with the IMF. However, the first and second oil shocks of 1973 and 1979 prompted disinflationary monetary policy measures from developed countries, resulting in rising interest rates that greatly increased the repayment burdens of Argentina and Latin American countries at large.
As the countries’ inability to repay their debts became apparent, there was a sudden stop in foreign capital inflows and subsequent capital flight. In Argentina, for the period between 1971 and 1985, external debt increased by US$41 billion and capital flight totaled US$25.9 billion.[5]
Domestically, the inflationary effects of the oil shocks, in addition to large currency devaluations, drastically reduced Argentines’ purchasing power, resulting in large-scale political turmoil. In 1975, the General Confederation of Workers (CGT) organized its first ever general strike against the government of Isabel Perón, demanding a wage increase of 150 percent.[6] The ensuing protests and social instability, coupled with an average monthly inflation rate of 35 percent, provided the grounds for the military junta to launch a coup d’état in March 1976, marking the beginning of the Dirty War.[7] The exorbitant cost of the 1982 Falklands War, in conjunction with misguided attempts at neoliberal economic reform, which were encouraged by the IMF and included privatization of state-owned enterprises and heavy foreign borrowing for public works, resulted in ballooning debt levels. By the end of the dictatorship in 1983, the annual inflation rate had reached 343.8 percent.[8]
Beginning in 1983, the newly elected democratic government of Raúl Alfonsín engaged with the IMF in a series of SBAs with larger principal amounts (see Appendix 1), in exchange for the promise of yet again implementing a series of neoliberal policies with a heavy emphasis on fiscal austerity. However, the political economy constraints of the re-democratization process made fiscal consolidation impossible, as significant amounts of social spending and progressive real wage adjustments were necessary to catch up with rapid inflation. Furthermore, social spending constituted an integral step to earn political capital by repaying the heavy social debts inherited from the bloodiest military dictatorship in Latin America. Ultimately, these efforts did little to compensate the population, as real wages increased by 35 percent while inflation soared 626.7 percent in 1984.[9]
With a country on the brink of default, and with the IMF blocking further loans, the Alfonsín administration launched the Austral Plan, effectively replacing the Argentine peso with a new currency, the austral, at a rate of 1000 to 1, in addition to freezing wages and prices. The IMF repudiated this heterodox stabilization plan, and continued to deny Argentina further loan facilities throughout 1985.[10] While it enjoyed initial success in curbing inflation, the Austral Plan collapsed under the weight of an overvalued real exchange rate and falling commodity prices. This, in turn, led to a widening current account deficit coupled with a growing fiscal deficit. In 1989, annual inflation exceeded 5,000 percent, officially becoming hyperinflation.[11]
Convertibility, Corralito and Corralón
With the demise of the Austral Plan, the Convertibility Plan was born under the new administration of Carlos Menem and his Minister of Finance, Domingo Cavallo. Convertibility consisted of pegging the Argentine peso to the US dollar at a one-to-one parity, by maintaining a 100 percent backing of the monetary base in foreign exchange reserves. The Congress ratified the plan as the Law of Convertibility of the Austral. The rigidity and relative irreversibility of the plan represented an attempt to restore investor confidence in the crisis-ridden economy by preventing inflationary debt monetization. As with the Austral Plan, the IMF initially expressed concerns about the heterodox nature of Convertibility, but quickly changed its tune as the Argentine economy rebounded strongly with GDP growth of 10.5 and 10.3 percent in 1991 and 1992 respectively, and annual inflation dropped to single-digit levels in 1993 (see Appendix 2). According to the IMF, at the time of the introduction of the currency board, Fund staff expressed misgivings about the viability of the regime in light of concerns about price and wage competitiveness and the conduct of fiscal policy. However, over time, despite the vulnerabilities exposed during the Tequila crisis, the staff’s assessment of the currency board regime became more positive.[12]
Furthermore, Menem implemented a series of neoliberal reforms that aligned seamlessly with the Washington Consensus economic policy prescriptions promoted by the IMF.[13] Taking full advantage of the political capital he had gained from curbing hyperinflation and adeptly operating the patronage-based machine politics of the Justicialist Party, Menem privatized major state-owned enterprises, lowered tariffs, and removed import controls, spurring foreign investment. This elicited high praise from the IMF, which hailed Argentina as the poster child of neoliberal economic reform while providing the country with a succession of SBA programs, marking the first time a Peronist administration ever engaged in IMF programs.[14] In addition, the IMF also provided Argentina with an Extended Fund Facility (EFF), a program designed to assist countries in the implementation of medium-term structural reforms.[15]
The onset of the Tequila crisis of 1994 revealed large structural imbalances in the Argentine economy. The sudden devaluation of the Mexican peso reverberated through South America as investors fled to safer assets, leading to a sharpening current account deficit in 1994 and an economic recession in 1995 (see Appendix 2). Despite these pitfalls, the IMF continued to provide new financing to Argentina. While economic growth did recover quickly in 1996 and 1997, the 1998 Brazilian currency crisis that resulted in the collapse of the dollar-real fixed peg put further pressure on Argentina’s overvalued real exchange rate and external debt burden (see Appendix 3).
Rather than facing the blatant unsustainability of convertibility, the IMF continued throwing good money after bad, signing another SBA in 2001 in the amount of 16.9 billion SDRs (US$23.4 billion), the largest disbursement that had ever been made to any country at the time. In addition, the IMF also extended a Supplemental Reserve Facility (SRF) to Argentina of 6 billion SDRs (US$8.3 billion) in 2001, an augmentation of the SBA meant for exceptional balance of payments difficulties stemming from large short-term financing needs (see Appendix 1).[16] Moreover, this was part of a larger US$40 billion multilateral assistance package organized by the IMF, involving the Inter-American Development Bank, the World Bank, Spain, and private creditors, which was negotiated assuming a baseline scenario of 2.5 percent GDP growth for 2001 (versus the actual decline of 4.4 percent).[17]
Ultimately, in December 2001, Argentina declared a unilateral default on nearly US$100 billion in external debt, the largest sovereign default in history at the time. The government imposed the infamous corralito, a temporary freeze on bank accounts with the purpose of preventing a bank run. This had precisely the opposite effect and resulted in a full-blown banking crisis. The government then proceeded to ratify the corralón, the pesoification of deposits by forcibly exchanging all remaining dollar-denominated deposits for peso-denominated bonds. In January 2002, convertibility was officially abandoned, and the peso was allowed to freely float, whereupon it depreciated 75 percent against the dollar.
The immediate macroeconomic consequences of the crisis were severe. Real GDP fell by about 11 percent in 2002, bringing the cumulative decline since 1998 to almost 20 percent; and the unemployment rate rose above 20 percent. Inflation peaked at a monthly rate of about 10 percent in April, averaging around 40 percent for the year as a whole. The public debt ratio more than doubled from 63 percent of GDP at end-2001 to about 135 percent of GDP at end-2002.[18]
In the aftermath of the crisis, the IMF released a mea culpa document that acknowledged the Fund’s role in continuously leveraging the Argentine economy while ignoring the macroeconomic warning signs during the final years of convertibility. The Fund stated that “the provision of significant new financing only postponed the inevitable and, by raising the debt burden, also meant that the costs of the eventual collapse were all the greater.”[19] However, the Fund distanced itself from any responsibility for the economic policies that precipitated the 2001 crisis, and the broad conclusion of the analysis was that there was insufficient structural content and conditionality in the IMF programs.[20] The Fund’s conclusion demonstrates its detachment from the harsh reality of Argentine society during and after the crisis, and a general lack of understanding of the political economy of Argentina in the policymaking framework.
When considering the historical role of the IMF as a lender of last resort to military dictatorships or military-backed governments as well as non-Peronist governments, in addition to the Fund’s misguided support for the Convertibility Plan and inadequate response to the 2001 crisis, it is possible to comprehend the inextricable link in Argentines’ minds between military dictatorship, neoliberalism, and the IMF. The historical analysis above also elucidates the IMF’s role in precipitating the 2001 crisis. The IMF’s role, in turn, provided Néstor Kirchner and Cristina Fernández de Kirchner with an effective platform of external blame to use while implementing their populist and protectionist economic policies. During the Kirchner presidencies, Argentina paid off its IMF loans in 2006, but refused to pay back the private bondholders who had resisted the debt haircut, thereafter locking itself out of international capital markets for twelve years, until President Mauricio Macri took office in December 2015.
Lessons from the Crisis in Argentina
The IMF did learn a number of important lessons after the 2001 crisis that were reflected in subsequent crisis responses. For instance, the 2002 Uruguay crisis that ensued as a result of the Argentine banking crisis saw the successful implementation of a voluntary restructuring framework–which the IMF had opposed at first, demanding that Uruguay default on its debt and convert its deposits into bonds, just like Argentina had done.[21] Ultimately, though, the Uruguayan government was able to reach an agreement with its creditors to take a haircut that was just high enough to make the debt sustainable, yet low enough to prevent holdouts. This approach to debt restructuring became a benchmark for the IMF in future voluntary restructurings, such as in the cases of the Dominican Republic in 2005 and Jamaica in 2010.[22]
The IMF also noted in its review of the 2001 financial crisis that “the Argentine crisis calls for a new focus on sovereign debt and the debt dynamics, both with regard to crisis prevention and resolution. It is striking that, when Argentina’s debt started on the path of no return, its level (as a share of GDP) was in a range not previously viewed as alarming.”[23] The IMF highlighted the need for a more systematic and disciplined method for debt sustainability analysis, as well as more well-defined criteria for exceptional access cases and periodic assessments of countries engaging in prolonged use of Fund resources.
However, there are important caveats to these lessons learned. Firstly, these debt restructuring cases were very small compared to the Argentine default in 2001, and the small size of these economies greatly simplified the restructuring process. Secondly, particularly in the case of Uruguay, the country’s history of prudent economic management, and its status as the only investment grade country in Latin America played a key role in investor confidence in Uruguay’s ability to weather the crisis. In addition, Uruguay received a loan of US$1.5 billion from the US Treasury’s Exchange Stabilization Fund that provided immediate crisis relief, a feat that Argentina would never be able to achieve, given its poor credit history and lukewarm relations with the US in the aftermath of the Cold War.[24] Lastly, these crisis response successes are shadowed by the case of Greece in 2010 that set the new record for the largest sovereign debt default, and once again demonstrated the IMF’s limited ability for crisis resolution when the case involves a country with a history of poor financial credibility and a large stock of foreign-currency-denominated debt.
Is This Time Different?
In light of these continuities, it is important to examine the IMF’s evaluation of the current Argentine political economy and debt sustainability in the context of the country’s recent request for a US$57 billion SBA in September 2018, the largest lending arrangement the IMF has ever made.[25] The IMF Debt Sustainability Analysis (DSA) baseline scenario shows that federal government debt is expected to increase to 65 percent of GDP in 2018 before gradually declining towards 53 percent of GDP by 2023.[26]
The assumptions for the baseline scenario include 0.4 percent and 1.5 percent growth in GDP, as well as 24.9 percent and 19.6 percent annual inflation in 2018 and 2019, respectively (see Appendix 4). These numbers are striking compared to the realized GDP contraction of -2.5 percent in 2018 and -0.2 percent in 1Q2019, as well as the inflation of 47.6 percent in 2018 and 55.8 percent year-over-year as of June 2019.[27] Moreover, the key assumption of the DSA is that fiscal consolidation will contribute to containing the accumulation of debt going forward. Other financing assumptions include the continued rollover of intra-public sector debt, partial financing provision by domestic creditors, and an increase in the average effective interest rate on total debt from 7.1 percent in 2018 to nearly 8 percent in 2021.[28]
The IMF report recognizes that the baseline assumptions for growth and inflation are optimistic, and qualifies the primary deficit reduction assumption as “ambitious compared with the distribution of observed adjustments.”[29] (See Appendix 5.1-5.3) Yet, in fact, upon a closer inspection of the political economy of Argentina and the DSA methodology, the baseline scenario may be even less realistic than suggested by the report.
Political Economy Constraints of Argentine Debt Dynamics
“Déficit cero”
The pivotal assumption of the DSA baseline scenario is the success of the 2019 government budget. However, there is ample reason to question both the mechanics and the feasibility of the budget. To begin with, the so-called déficit cero proposal only refers to attaining a primary budget balance. This does not consider interest payments on debt, which amount to 2.9 percent and 3.2 percent of GDP in 2018 and 2019 respectively, and represent a 47 percent year-over-year increase.[30] As mentioned in the DSA, a higher average effective interest rate will create additional pressures on debt repayment in the short to medium term.
Furthermore, neither the government budget nor the DSA baseline scenario take provincial debt into consideration. Due to Argentina’s federal tax co-participation mechanism, local governments have complete autonomy over provincial fiscal administration. In 2017, the provinces ran an overall fiscal deficit of 0.8 percent of GDP, and total provincial debt at end-2017 reached 5.3 percent of GDP, of which 60 percent is denominated in foreign currency (see Appendix 6.1). There is also significant heterogeneity in debt levels across provinces, with peripheral provinces that have the highest debt-to-revenue ratios also holding the largest absolute debt stock, implying potential contingent liability risks for the federal government (see Appendices 6.2 and 6.3).[31]
Public opinion of Macri and the IMF
The fiscal consolidation plan following the IMF SBA has taken a toll on President Mauricio Macri’s already weakened political capital. Macri’s approval ratings have plummeted in 2018 alongside the peso devaluation and high inflation. Universidad Torcuato di Tella’s Government Confidence Index shows a continuous drop in confidence throughout 2018, with a slight rebound beginning in May 2019 as a result of the deceleration of inflation and the relative calm of the exchange rate. One can clearly see the link between the President’s ratings and economic stability (see Appendix 7).[32]
The IMF has demonstrated increased sensitivity to Argentina’s political economy constraints, as shown in the inclusion of a social spending floor in the SBA to preserve healthcare spending, expand public childcare by 12 percent in an effort to raise female labor force participation, and improve targeted coverage of the universal child allowance.[33] However, while the budget allocates a 0.3 percent of GDP increase in social spending, it further curtails subsidies on transport and utilities by 0.5 percent of GDP and increases export and income tax revenues by 1.3 percent of GDP,[34][35] making the redistributive effect of social spending relatively minor for low-income households, but also increasing the already exorbitant tax burden on the middle and upper classes. Fiscal austerity entails a large social and political cost for Macri at an inopportune time, with elections on the horizon. In the case that Cambiemos fails to be reelected in October 2019, all major opposition party candidates, of which the infamous ex-President Cristina Fernández de Kirchner is the front runner, have so far vowed to renegotiate or cancel the IMF SBA agreement, leaving the future of Argentine debt sustainability highly uncertain.
Dollar-denominated debt and international investor expectations
Finally, dollar-denominated debt is Argentina’s recurring nightmare. Currently, nearly 70 percent of Argentina’s debt stock is denominated-in or linked-to a foreign currency, mainly the U.S. dollar.[36] Simultaneously, Argentina’s foreign exchange reserve levels dropped by more than 24 percent after the first disbursement of the SBA in June 2018, as the central bank attempted to defend the peso against speculative attacks (see Appendix 8). This combination has proven deadly time and again for Argentina, and is reflected in the DSA stress test, which shows that debt could jump to 81 percent of GDP in the event of an exchange rate shock.[37]
Stemming from its high proportion of dollar-denominated debt, low international investor confidence remains Argentina’s Achilles heel. If investors believe Argentina is unable to repay its external debt, the ensuing capital flight will create a self-fulfilling prophecy. This is precisely what happened in the currency crisis of 2018. Firstly, Argentina’s track record of financial crises lends little credibility to the government and central bank. Additionally, with a stock of reserves equivalent to 11 percent of GDP and short-term debt amounting to 27 percent of GDP,[38] Argentina’s low reserve adequacy negatively impacted investor confidence. The central bank’s poor communication of rationale behind policy changes, whether it was relaxing the inflation target from the 8-12 percent band to 15 percent in December 2017, or cutting its policy rate by 75 basis points to 27.25 percent in January 2018,[39] has also further weakened central bank credibility and introduced more uncertainty in investor expectations. Finally, the generally bearish investor sentiment towards emerging markets in 2018 impacted countries as divergent as Turkey and Argentina, all culminating in a massive currency sell-off.
While the currency has stabilized to a degree, it is still too early to conclude that the risk of a further exchange rate shock to the dollar-denominated debt has subsided. The central bank’s move to an inflation targeting regime, with a monetary base target of zero percent growth and a non-intervention foreign exchange band until December 2019,[40] certainly contributed positively to stabilization, but changing investor expectations can still turn a fairly credible monetary regime into a fragile one. In April 2019, the IMF carried out its third review under the SBA and made its third disbursement of US$10.8 billion,[41] boosting Argentina’s foreign exchange reserves to a new record high of US$77.3 billion.[42] However, the IMF warned in its staff report against ceding to pressures to keep energy and utilities subsidies and to increase wages,[43] revealing the difficulties of fiscal consolidation during a recession and an upcoming election year.
Conclusion: Argentina’s Debt Sustainable but Not with High Probability
An examination of Argentina’s current political economy reveals that many structural vulnerabilities exposed during the 2001 financial crisis persist to this day, specifically, constraints to fiscal consolidation and the large stock of dollar-denominated liabilities. Meanwhile, the IMF’s joint tendencies to overestimate Argentine economic growth potential while underestimating both the probability and severity of crises, cast doubt on the Fund’s present evaluation of the Argentine economy and its ultimate decision to provide the country with an unprecedentedly large loan package.
Argentina’s debt sustainability hinges upon a delicate balance of domestic and international factors. The first necessary precondition to the IMF DSA baseline scenario is the successful implementation of the 2019 federal government budget, as well as the fulfillment of crucial fiscal consolidation at the provincial level. Additionally, the Macri administration must maintain an adequate level of social and political capital leading up to the 2019 elections, in order for fiscal consolidation to continue in the medium term. Simultaneously, the central bank must rebuild its credibility by maintaining an adequate level of foreign exchange reserves, in order to defend the peso from another potential speculative attack. Finally, the country remains vulnerable to shifts in market sentiment towards emerging markets at large, as well as possible external interest rate and exchange rate shocks. If any of these conditions fails to hold, Argentina could face a new sovereign debt crisis, reaffirming the IMF DSA’s conclusion that Argentina’s debt is sustainable but not with high probability.
While the IMF’s crisis response outcomes following the 2001 financial crisis showed significant improvement in terms of policy flexibility to accommodate domestic political considerations and the incorporation of voluntary debt restructuring schemes, the Fund has continued to demonstrate limited capability to respond to a financial crisis of the magnitude and scope that Argentina presented in 2001. More broadly, the IMF’s controversial historical role in Argentina and the vast political reverberations of its interventions adds yet another dimension of uniqueness to this relationship, which may explain the Fund’s generous SBA as an attempt to seek redemption for its past misgivings. Ultimately, whether the current IMF program will be successful, and whether Argentines can change their view of the IMF as the “dollar-stealing bearer of misery,” will depend on the elusive balance between the political viability of domestic fiscal consolidation, and the volatility of international market sentiment.
¡Qué falta de respeto, qué atropello a la razón!
Cualquiera es un señor, cualquiera es un ladrón…
Siglo veinte, cambalache problemático y febril…
El que no llora no mama y el que no afana es un gil.
Appendices
Appendix 1
(In thousands of SDRs), Listed by Head of State and Party Affiliation
Source: International Monetary Fund, elaborated by author.
Appendix 2
Appendix 3
Appendix 4
Source: IMF Staff calculations.
Appendix 5.1 – 5.3
Source: IMF Staff calculations.
Appendix 6.1
Appendix 6.2 – 6.3
Appendix 7
Source: Universidad Torcuato di Tecla
Appendix 8
Source: Banco Central de la República Argentina
References
[1]“Update on Argentina: IMF’s Revised Stand-By Arrangement,” International Monetary Fund, October 26, 2018, https://www.imf.org/en/Countries/ARG/argentina-update.
[2]“Argentina Request for Stand-By Arrangement: Press Release and Staff Report,” International Monetary Fund, IMF Country Report No.18/219, July 2018,pp. 51, https://www.imf.org/~/media/Files/Publications/CR/2018/cr18219.ashx.
[3]Nicholas Phillips, “No Love Lost: A Brief History of Argentina and the IMF,” The Bubble, May 27, 2018, https://www.thebubble.com/history-argentina-imf/.
[4]“IMF Stand-By Arrangement (SBA),” International Monetary Fund, March 8, 2018, https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/33/Stand-By-Arrangement.
[5]Manuel Pastor, “Latin America, the Debt Crisis, and the International Monetary Fund,” Latin American Perspectives 16, no. 1 (1989): pp. 99.
[6]Pablo Gerchunoff and Lucas Llach, El ciclo de la ilusión y el desencanto: Un siglo de políticas económicas argentinas, (Argentina: Compañía Editora Espasa Calpe Argentina/Ariel, 1998), pp. 349.
[7]Guillermo A. Calvo, “Fractured Liberalism: Argentina under Martínez de Hoz,” Economic Development and Cultural Change, vol. 34, no. 3 (April 1986): pp. 511.
[8]Ibid., pp. 512.
[9]Gerchunoff and Llach, pp. 395.
[10]Pastor, pp. 109.
[11]Gerchunoff and Llach, pp. 419.
[12]“Lessons from the Crisis in Argentina,” International Monetary Fund, October 8, 2003, pp. 8, https://www.imf.org/external/np/pdr/lessons/100803.pdf.
[13]Note:The Washington Consensus was a set of economic policies formulated in 1989 by John Williamson, Senior Fellow at the Peterson Institute for International Economics, in the context of the Latin American debt crisis. The original ten policies include fiscal consolidation, privatization, trade and investment liberalization, competitive and market-based exchange rates, deregulation, among others. John Williamson, “The Washington Consensus as Policy Prescription for Development,” Peterson Institute for International Economics, January 13, 2004, https://www.piie.com/publications/papers/williamson0204.pdf.
[14]“Lessons from the Crisis in Argentina,” pp. 3.
[15]“IMF Extended Fund Facility (EFF),” International Monetary Fund, April 20, 2018, https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/56/Extended-Fund-Facility.
[16]“Press Release: IMF Approves Supplemental Reserve Facility,” International Monetary Fund, Press Release no. 97/59, December 17, 1997, https://www.imf.org/en/News/Articles/2015/09/14/01/49/pr9759.
[17]J.F. Hornbeck, “The Argentine Financial Crisis: A Chronology of Events,” CRS Report for Congress, pp. 3, http://fpc.state.gov/documents/organization/8040.pdf.
[18]“Lessons from the Crisis in Argentina,” pp. 63.
[19]Ibid., pp. 67.
[20]Ibid., pp. 64.
[21]John B. Taylor, “The 2002 Uruguayan Financial Crisis: Five Years Later,” Conference on the 2002 Uruguayan Financial Crisis and Its Aftermath, Montevideo, Uruguay, May 29, 2007, pp. 2.
[22]“Sovereign Debt Restructuring: Recent Developments and Implications for the Fund’s Legal and Policy Framework,” International Monetary Fund, April 26, 2013, https://www.imf.org/external/np/pp/eng/2013/042613.pdf.
[23]“Lessons from the Crisis in Argentina,” pp. 69.
[24]Taylor, pp. 3.
[25]“Update on Argentina: IMF’s Revised Stand-By Arrangement.”
[26]Note:The Argentine government has since announced its commitment to achieve a primary balance in 2019 and a 1 percent primary surplus in 2020.
[27]IMF World Economic Outlook Database, April 2019; INDEC.
[28]“Argentina Request for SBA,” pp. 53-54.
[29]Op. cit., pp. 55.
[30]“Acciones para alcanzar el equilibrio fiscal,” Ministerio de Hacienda, September 3, 2018, pp.5, https://www.argentina.gob.ar/sites/default/files/presentacionmedidas20180903.pdf.
[31]“Argentina Request for SBA,” pp. 52-53.
[32]“Índice de Confianza en el Gobierno (ICG),” Universidad Torcuato di Tella, Escuela de Gobierno, https://www.utdt.edu/ver_contenido.php?id_contenido=1439&id_item_menu=2964.
[33]“Update on Argentina: IMF’s Revised SBA.”
[34]“Acciones para alcanzar el equilibrio fiscal,” pp. 3.
[35] Pablo Wende, “Impuesto por impuesto, las 11 novedades del Presupuesto 2019,” Infobae, September 18, 2018, https://www.infobae.com/economia/2018/09/18/impuesto-por-impuesto-las-11-novedades-del-presupuesto-2019/.
[36]“Argentina Request for SBA,” pp. 52.
[37]Op. cit., pp. 55. Note:Exchange rate shock used in standard DSA stress test is a 50 percent real depreciation with 0.25 pass-through.
[38]“Assessing Reserve Adequacy,” International Monetary Fund,https://www.imf.org/external/datamapper/ARA/index.html. Note:For comparison purposes, Brazil’s stock of reserves is 17.5 percent of GDP and short-term debt is 6.43 percent of GDP as of September 2018.
[39]Benedict Mander, “Shift by Argentina’s central bank rings alarm bells,” Financial Times, January 31, 2018, https://www.ft.com/content/510d01fa-0660-11e8-9650-9c0ad2d7c5b5.
[40]“Update on Argentina: IMF’s Revised SBA.”
[41]“IMF Executive Board Completes Third Review Under Argentina’s Stand-By Arrangement, Approves US$10.8 Billion Disbursement Press Release and Staff Report,” International Monetary Fund, IMF Country Report No. 19/99, April 5, 2019, https://www.imf.org/en/Publications/CR/Issues/2019/04/05/Argentina-Third-Review-under-the-Stand-By-Arrangement-Request-for-Waivers-of-Applicability-46740.
[42]Francisco Jueguen, “Entraron los US$7600 millones del FMI y las reservas llegaron a un nuevo máximo,” La Nación, December 21, 2018, https://www.lanacion.com.ar/2204833-entraron-us-7600-millones-del-fmi-reservas.
[43]“Argentina Second Review under the Stand-By Arrangement; Financing Assurances Review; and Request for Modification of Performance Criterion: Press Release and Staff Report,” International Monetary Fund, IMF Country Report No.18/374, December 2018,pp. 11, https://www.imf.org/~/media/Files/Publications/CR/2018/cr18374.ashx.
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