Argentina: More Than a Crisis

Argentina is facing a catastrophe, not just a crisis. With no currency, a serious probability of a collapse of the banking system, no access to finance, no place in the international order, and the likely loss of trade resulting from the default, Eduardo Duhalde’s government must rebuild the country’s political and economic institutions.

The World Today
6 minute READ

Celia Szusterman

Director, Latin America Programme, Institute for Statecraft

The economic emergency law passed by Congress on January 7 delegates to the President powers that traditionally belong to the legislature, and others, like the exchange rate, that ought to belong to the market. The task ahead is monumental, the risks of failure too terrible to contemplate.

Another decade of prudent management and reform will be needed to restore trust. Perhaps it will be a further decade before Argentina experiences rates of growth comparable to the 1990s. A wrong diagnosis could mean falling back on inflation, price and exchange controls, politically-fixed tariffs, excessive regulations, black markets and indefinitely frozen deposits.

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