La crisis argentina

UNIVERSIDAD RICARDO PALMA

FACULTAD DE CIENCIAS ECONOMICAS Y EMPRESARIALES

“ARGENTINE CRISIS 2002”

COURSE:
FINANZAS INTERNACIONALES I

PROFESSOR:
Jorge Edgardo Ramírez Arroyo

MEMBERS:

Katthya Ortiz Quiroz
Michelle Gonzales Lecaros
Renzo Minchola Guardia

2010

INDEX

Introduction 3
The Argentine Crisis 3
Crisis expansion……………………………………………………………………………….……6

The MostAffected Sectors 7
How Won in the Argentine Crisis 8
Similarties with other Crisis 8
Similarities with the Last Crisis of US………………………………………………………….10
Conclutions……………………………………………………………………………………….11
Bibliography…………………………………………………………………..………………….12

Introduction

Argentina’s crisis was a critical period and a financial situation that affected Argentina's economy during the late 1990sand early 2000s started with the decrease of real GDP in 1999 and ended in 2002 with the return to GDP growth.

It resulted from a confluence of events, some external to Argentina’s policy process, others directly related to its political and economic choices. Although it is not easy to discern at what specific point in time Argentina’s economic situation turned into a crisis, it is clear thatby early 2001, political, economic and social events had been taken a significant turn for the worse. The crisis started in the year 1980 but has a diversity of events that leads to the final collapse in 2002, and takes serious process and decisions to get out of that situation finally in the year 2004.

On the other hand, this Argentina’s Crisis compares to the one that occurs in LatinAmerica, Asia, and Africa. Was quite favorably to levels seen in these mention countries.

The Argentina’s Crisis

The crisis began around the 1980s where Argentina suffered an extended period of economic instability including the Latin American debt crisis and hyperinflation. The country was subject to military dictatorship for many years, which resulted in a number of significant economicproblems. During the National Reorganization Process (1976–1983) huge debt was acquired for money that was later lost in unfinished projects, the Falklands War, and the state's takeover of private debts.

In addition, in that year, democracy in the country was restored with the election of President Raúl Alfonsín. The new government's plans included stabilizing Argentina's economy including thecreation of a new currency that was the austral, first of its kind not to carry the word peso as part of its name, for which new loans were required.

The state eventually became unable to pay the interest of this debt and confidence in the austral collapsed. Inflation, which had been held to 10 to 20% a month, spiraled out of control.

By July 1989, Argentina's inflation reached 200% that monthalone, topping 5,000% for the year. During the Alfonsin years, unemployment did not substantially increase; but, real wages fell by almost half to the lowest level in fifty years. This kind of problems oblie President Alfonsín resigned five months before ending his term, and Carlos Menem, who was already President-elect, took office and appoints Domingo Cavallo as Minister of Economy. Together theyenact a major structural adjustment program including tax reform, privatization, trade liberalization, deregulation, and adoption of a currency board.

Here it started the fight against inflation that appeared to go well, and Argentina began to recover. In early 1991, under the rule of Minister of Economy Domingo Cavallo, executive measures fixed the value of Argentine currency at 10,000australes per United States dollar. Furthermore, any citizen could go to a bank and convert any amount of domestic currency to dollars and to secure this "convertibility", the Central Bank of Argentina had to keep its U.S. dollar foreign exchange reserves at the same level as the cash in circulation. The initial aim of such measures was to ensure the acceptance of domestic currency, since during...