Argentina's Economic Crisis
The economic crisis that struck Argentina in the late 2001 and early 2002was principally a result of downturns caused by incompetent economicpolicies of the past years. The economic measures taken by the Argentinegovernment worsened Argentina's economic scenario, placing the nation underdepression, economic recession, unemployment, and high interest on foreigndebts. Due to the nation's worsening economic situation and struggle topay escalating debts, even the International Monetary Fund (IMF) refused torelease Argentina with aids (Gabetta, Carlos. Economic Crisis Ends an Era,Argentina: IMF Show State Revolts).Some of the common and clear reasons that contributed in Argentina'seconomic crisis, which particularly worsened in the late 2001 and early
Argentina and MERCOSURBeing in the trading bloc of Mercosur is one factor that contributed toArgentina's poor economy. Massive PrivatizationMassive privatization of the nation's sources of economy was thought of asa solution in uplifting Argentina's worsening economy. On the other hand, public assets such as the national airline ofArgentina, Aerolineas, also financially failed. Also, refinancing of debts furtheradds to the nation's liabilities, which, simultaneously cuts short thenation's budget for public schemes to provide greater budget for foreigndebt payments. The nation's trading growth is blocked andhindered by Mercosur's high tariffs. s on foreign debts, massive privatization,global economic crisis, and lack of resources. Investorsdecreased, lessening the country's GDP and financial resources. Some of the nation's public companies were sold at lowprices. Further,the nation's finance resources declined when business employers no longercontribute to the social security system. In his Argentina's Economic Crisis: Interpretations andProposals, Claudio Katz indicates his comment on interest payments, statingthat These (interest payments on foreign debt) have contributed to the tripling of the Government's administrative expenses, consuming seven times more funds than social assistance, for example, and twenty-three times more than the state employment schemes. Interest Payments on Foreign DebtsOne of the sources of Argentina's crisis in economy is the payment on highinterest of the nation's foreign debt. This caused Argentina to allocate ahigh percentage of the nation's budget to foreign debt payments whilecutting budget for public expenditures. If only Argentina is independent inits economic relationship with the rest of the world economy, being able toimplement its own economic policies in the international trade, the exportand import market can serve as a bridge to their economic stability. Claudio Katz commented on theelimination of employer's contribution, suggesting that This "incentive to investment" actually contributed to generating a record level of unemployment, provoking a loss of revenue to the state, equivalent to a third of the public debt.
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