Argentina: Worst economic crisis since 2001

BEUNOS AIRES: Argentina elects its president today battered by its worst economic crisis in 18 years, with the government forced to take an IMF rescue loan and impose unpopular austerity measures.

In 2001 it defaulted on around $100 billion of debt, then the biggest default in history, after three years of recession and austerity that led to deadly rioting. Latin America’s third-largest economy has been back in recession since 2018; annual inflation is expected to reach 55 percent and unemployment is at 11 percent.

Here is a recap of the unfolding economic crisis.

Currency collapse

Over April and May 2018 Argentina’s peso loses nearly 20 percent of its value in 45 days. The Central Bank intervenes several times, hiking its benchmark interest rate to 40 percent, selling foreign currency reserves and injecting more than $10 billion into the economy.

Massive IMF loan

On June 20 the International Monetary Fund approves a $50 billion bailout to tackle inflation, budget deficits and the weakening currency. President Mauricio Macri’s government agrees to take its own measures. Two days later the IMF releases $15 billion.

Strike, protests

On June 25 the country grinds to a halt in a general strike to protest the loan, with many Argentines blaming the IMF for the 2001 crisis. In July and August there are demonstrations over soaring inflation in Buenos Aires and other cities.

Austerity

On September 3 Macri announces austerity measures that include halving the number of government ministries and restoring taxes on grain exporters. There is another major strike on September 25 and the president of the central bank resigns.

Even bigger loan

On September 26 the IMF agrees to boost its crisis loan package to $57.1 billion to be delivered in instalments over several months. The World Bank also agrees to two loans totaling $950 million.

Argentina ends 2018 with inflation at 47 percent, the highest since 1991. The peso has lost half its value against the dollar over the year.

Price freeze

On April 4 tens of thousands of people protest against austerity measures. To limit the impact of inflation, the government on April 17 freezes the price of basic goods and public services. The fifth general strike of Macri’s presidency brings the country to a standstill on May 29.

Macri poll setback

On August 11 Macri is crushed in a key party primary election by populist Alberto Fernandez, who emerges as the favorite for the October elections. On August 14 Macri announces minimum wage hikes, tax cuts and a 90-day freeze on fuel prices. Two days later rating agencies Fitch and S&P downgrade Argentina’s credit rating, citing increased uncertainty and risk of default.

The peso ends the week 20 percent down against the dollar. On August 17 the economy minister resigns. On August 28 Argentina asks the IMF to restructure its debt payments on the bailout loan.

Food emergency

On September 1 the government imposes foreignexchange controls on exporters, including requiring permission before money is transferred abroad. By September 19, amid protests, both houses of parliament have approved an emergency law to provide a 50 percent increase in food assistance programs to growing numbers of poor. —AFP