Fear and loathing in Buenos Aires: will Argentina’s IMF gamble pay off? | Larry Elliott

Argentina’s president and IMF leave troubled relationship behind to shore up peso – but people have long memories

Seventeen years ago Argentina was a country in crisis. The economy was in freefall, there was a general strike, there was capital flight and there were middle-class protests on the streets of Buenos Aires because the banks were closed for business. People lost their lives in riots. Presidents came and went with bewildering regularity. Argentina was to the southern hemisphere what Greece was to the northern hemisphere in 2015 – only worse.

The International Monetary Fund was deeply implicated in the crisis. The Washington-based institution had been a strong backer of the country’s hardline economic strategy based around convertibility of the peso into dollars. The idea was that currency discipline would force Argentina to make a decisive break with its inflationary past. What it actually led to by the turn of the millennium was a deep slump. The political backlash against grinding austerity led not only to the abandoning of convertibility but a break with the IMF and all its works.

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