The Financial Crisis in Argentina

Publication Date: June 2003

Publisher: Library of Congress. Congressional Research Service

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Coverage: Argentina

Abstract:

After nearly four years of recession, Argentina plunged into a severe political and financial crisis that ended the presidency of Fernando de la Rua on December 20, 2001. On January 1, 2002, the Argentine Congress selected Peronist Party leader Eduardo Duhalde to complete his term of office. For over a year, President Duhalde struggled with Congress to define an economic strategy that would unify the country and solidify support for a new round of international financial assistance. Unable to come to terms with the IMF over a medium-term package, on January 24, 2003 the Fund approved, with some reservations, a new transitional $6.8 billion arrangement that provided enough financial resources to "roll over" Argentina's current IMF commitments only through August 2003. This helped provide stability during the presidential election cycle, which resulted in Governor Nestor Kirchner's victory. Although Argentina's economy has stabilized, it remains fragile, the country is deeply in debt, and the new administration faces difficult political choices if it is to define a long-term economic recovery strategy. This report concludes with the May 25, 2003 inauguration of President Kirchner and will not be updated.