Argentina Crash of 1982 Ryan Cavanaugh Ahmed Al Ghazali Trent Davis Ben Wildt.
-
Upload
katrina-hampton -
Category
Documents
-
view
217 -
download
1
Transcript of Argentina Crash of 1982 Ryan Cavanaugh Ahmed Al Ghazali Trent Davis Ben Wildt.
A History of Crisis
Civil war after liberation from Spain in 1810
No stable government in place until 1862
1890-91 crisis: Stemmed from budget problems; Argentina tried to repay
national debt with fiat currency, investor flight to safety.
Argentina was on the gold standard at the outbreak of WWI (have to sell debt to fund a war), abandoned it soon after
Events during economic crash of 1982
1982 president of Junta: Leopoldo Galtieri
Invaded Falkland Islands 2nd April 1982-14th June 1982.
Coup used to appeal to masses and divert public attention off economic crisis.
1st July 1982 new president by Junta: Reynaldo Bignone until 10th December 1983.
Raul Alfonsin democratically elected president 10th December, 1983.
Fighting many guerilla wars with anti-junta groups.
Causes of crash
Growing government spending, large wage raises, inefficient production- created chronic inflation and job losses.
Loss of confidence in economy led to capital flight out of country.
August 1982-Argentina approached Mexico for debt help, Mexico going through economic troubles their self.
Went to IMF for help, once IMF visited country and witnessed all of the damage they denied help.
High foreign debt interest payments.
Tax evasion prevented new revenues from helping economy revive.
Facts
1983 inflation near 1000%
1983 Peso replace by New Peso: 10,000 old pesos=1 new Peso
Official unemployment “5%”
400,000 companies of all sizes bankrupt by 1982.
1983-2001 policies failed to reverse situation.
Falklands war
Led to loss of Argentine military and suffered heavy causalities.
Used war to divert attention from economy onto a popular Argentine subject eventually leading to death of military Junta and new democratic Government.
Main Theory:Growth of State Debt
1973-1982 increase of public expenditure Deficits averaged 5.2% of GDP Financed through international borrowing
Eroded real savings and private investment Most of the debt was not registered
1983 Argentina had the highest inflation rate in the world
Steps Taken 1983-1989
IMF Agreement committed the military government to limiting fiscal deficit to 2.1% Actual figure for the year was 16.8%
1985, Raúl Alfonsín introduces Plan Austral
1987, Plan Austral begins to fail
Another IMF arrangement made in 1987 but fails in 1988
Steps Taken 1989-1994
President Carlos Menem is elected in May 1989
Appointed Domingo Cavallo in 1991
Set up free-market reforms such as opening trade, deregulating, and reforming the state
April 1991, Convertibility law pegged exchange rate between Peso and US Dollar
Effects of Policies
Inflation went from 1,344% annually in 1990 to 29% for a portion of 1991 and finally to a rate of 4% in 1994
Bimonetary system where people used US Dollars freely
Real GDP per person grew more then 10% between 1991 and 1992 then slowed to above 4% in 1993 and 1994
Increases in foreign investment
Works Cited
Remmer, K. L. (1990 ). Democracy and Economic Crisis: The Latin American Experience . World Politics , 315-335.
Saxton, J. (2003 ). Argentina's Economic Crisis: Causes and Cures. Hispanic Center for Economic Research .
The Economist . (2002, February 28th ). Retrieved April 19th, 2015 , from www.economist.com: http://www.economist.com/node/1010911
http://www.hacer.org/pdf/Schuler.pdf
"AROUND THE WORLD; Argentina's Inflation Skyrockets to 924%." NYtimes. October 12, 1983. <http://www.nytimes.com/1983/10/12/world/around-the-world-argentina-s-inflation-skyrockets-to-924.html.>
Marsh, Sarah. "Chronology: Argentina's Turbulent History of Economic Crises." Reuters. July 30, 2014. <http://www.reuters.com/article/2014/07/30/us-argentina-debt-chronology-idUSKBN0FZ23N20140730.>
Saxton, Jim. "ARGETINA’S ECONOMIC CRISIS: CAUSES AND CURES." Hispanic American Center for Economic Research. June 1, 2003. <http://www.hacer.org/pdf/Schuler.pdf.>
Smitha, Frank E. "Financial Crisis in Argentina, from the 1980s." Macrohistory and World Timeline. January 1, 2010. <http://www.fsmitha.com/h2/ch37-crises.htm.>