Argentina’s Reiterated Financial Crisis

by Spardha Sharma

Argentina is approaching an economic crisis. The current situation of the South American country is akin morass. Back in 2015, Mr. Marci’s victory was widely cherished by the Argentines, primarily because he had pledged to decline Argentina’s enormous deficits significantly. He had an audacious strategy to fulfil his promises through plunged state spending. He strongly proposed job creation, investments and most importantly, economic recovery.Four years after selling those promises, Mr. Macri’s posited propitious trajectory turned out to be a failure. Argentina’s economy hasn’t steered from its original path yet, but has cultivated new economic and social turmoil. The current inflation is well above 50%. About one third of the population is living in poverty. The Argentine Peso is perpetually depreciating, propelling central banks to surge interest rates.

Much of these symptoms resonate with Argentina’s previous financial crisis in the 1990s.Argentina was forced to seek rescue from IMF, which was a catalyst to austerity. IMF is vastly castigated by the Argentines and is painted to be the root cause of Argentina’s 2001 default. Even after ample allegations, IMF recognised Argentina’s economic triggers in early 2017 and readily stepped up as its saviour in 2018, for the second time, lending it $57 billion to restore economic stability.However, most of those efforts were in vain. Presently, the people have to inhabit themselves in insecure compounds as Mr. Marci cut subsidies on electricity and fuel, making basic services no longer affordable. His rationale behind this move was to redistribute wealth. However, businesses are shutting down due to inability to cover costs. Investors fled the market after the government raised a white flag in 2017, by increasing its inflation target.

This underscores the painful reality within which most Argentines are living. Only a serious measure can toss Argentina out of its economic debilitation. For a country blighted by economic trauma, the government should reinvigorate confidence in the government. Argentina should recalibrate its focus on self-sufficiency, rather than being dependent on rescue received from foreign institutions.

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