Argentina: Road to debt reduction 1991-2011

Abstract

This article analyzes the transformation in Argentina’s financial policies during the period of 1991-2011, examining the principal actions of the State oriented towards confronting the various problems of the public debt burden and its financing, as well as the relationships established with the financial sector and the IMF. The evolution of the country’s financial policies highlights one of the most notable differences between the period of convertibility, which ended in 2001, and the posterior period. The convertibility regime brought with it an overvalued currency, which determined the progressive increase in public debt and amplified the process of the financialization of the Argentine economy. On the other hand, the post-convertibility regime, supported by the maintenance of a competitive exchange rate together with fiscal and trade surpluses, has contributed to the promotion of productive over financial activity. Together with the debt restructuring, a process of gradual reduction in the relative weight of public debt has taken hold, freeing up resources to stimulate the domestic market. Consequently, after 2002 there is a clear erosion in the capacity of creditors, the IMF, and the financial sector in general to structurally condition growth dynamics; simultaneously, the national government gained greater degrees of financial autonomy. Finally, the article analyzes the challenges that the international crisis imposes on this evolution.