Argentina Through The Years
Argentina lies between the Andes and the Atlantic. Chile bound her history on the west, on the north by Bolivia and Paraguay; and on the east by Paraguay, Uruguay and the Atlantic Ocean. Its total area is about 2,951,000 square kilometers. Argentina's debt crisis can be studied as a problem in epidemiology. This is a powerful virus that can be the results of high world interest rates. This devastating effect affected many developing countries in the 80's. Some countries succumbed to the virus, having to reschedule their debts on emergency treatments. Some recovered suffering to enter a period of quiet convalescence while others are still suffering from seizures in the IMF's intensive care unit. It is important to understand why some countries fell to the debt crisis while others did not.
Chaotic government finances and the consequent resort to printing money have been at the heart of Argentina's problems.
English: The Andes. Photo was taken on a flight be...
English: The Andes. Photo was taken on a flight be...
English: Current account deficit of PIIGS countrie...Although the public-sector deficit was much reduced in 1982-86, the improvement stopped there. The printing of money to cover the deficit was temporarily suspended. As a result, the central bank's deficit became a key part of the overall public deficit. To finance its deficits, the government issued bonds, which both inflated the domestic debt and pushed up interest rates.
During the 80's, Argentina's current account was consistently in deficit because of heavy interest obligations on external dept. " The books were balanced only by successive rounds of rescheduling and the accumulations of arrears" (Economist Intelligence Unit 10). By this, It's very clear that the conditions of being behind in fulfilling payments will destroy Argentina's economy. Fortunately, 1990 was an exceptional in that current- accounts surplus was obtained because of an extremely large trade surplus. Debt represent a significant hurtle for developing nations as they continues...