|
|
| Line 3: |
Line 3: |
| [[Minimum Wage]] | | [[Minimum Wage]] |
|
| |
|
| [[Latin American Debt Crisis]] | | [[Argentina International Debt]] |
| | |
| Latin American Debt Crisis
| |
| | |
| The Latin American debt crisis started in the early 1980s when countries reached the point where their loans exceeded their income and they were not able to repay their external debt.
| |
| | |
| Origins
| |
| In the 1960s and 1970s many Latin American countries, notably Argentina, borrowed huge sums of money from international creditors for their industrialization models. These countries had booming economies at the time so the creditors were happy to lend them money. Therefore between 1975 and 1982, Latin American debt increased at an annual rate of 20.4%. This type of borrowing led Latin America to owe as much as 50% of their GDP. Interest rates grew even faster.
| |
| | |
| In the 1970s and 80s the world economy went into recession, and oil prices skyrocketed. Developing countries were in a financial emergency. Oil exporting countries had a huge increase in cash inflows and they invested their money with international banks, which use most of their gains from their investments as loans to Latin American governments. The debt crisis began when the international capital markets realized that Latin America would not be able to pay back their loans. The lenders refused refinancing their debt and the debts were now expected to be paid immediately.
| |
| | |
| In response to the crisis Argentina abandon its Import Substitution Industrialization (ISI) and adopted an export-oriented industrialization strategy, encouraged by the IMF. A massive process of capital outflow, particularly to the United States, served to depreciate the exchange rates, thereby raising the real interest rate. Real GDP growth rate for the region was only 2.3 percent between 1980 and 1985, but in per capita terms Latin America experienced negative growth of almost 9%.
| |
| | |
| The debt crisis contributed to the collapse of the last dictatorship in Argentina.
| |
| | |
| Dictatorship (1976-1983)
| |
| | |
| A military coup took power in 1976 with Rafael Videla as a leader, and exercised power until 1983. The armed forces repressed the population using harsh torturing measures and censorship. Most of the military repressors were trained in the U.S. financed School of the Americas.
| |
| | |
| Economic problems, charges of corruption, public revulsion in the face of human rights abuses and, finally, the country's 1982 defeat in the Falklands War discredited the Argentine military regime.
| |
| | |
| | |
| | |
| | |
| | |
| | |
| En 1976 : 8,2 billones de U$D;
| |
| | |
| en 1980 : 27,1 billones de U$D;
| |
| | |
| en 1983 : 43,5 billones de U$D;
| |
| | |
| en 1993 : 74,5 billones de U$D;
| |
| | |
| en 1995 : 84,0 billones de U$D;
| |
| | |
| en 1996 : 96,2 billones de U$D;
| |
| | |
| en 2000 :150,0 billones de U$D.
| |
| | |
| Nota : un billón = 100 millones.
| |
| | |
| Deuda externa argentina (en millones de dólares)
| |
| Año..........Deuda.................Servicio pagado
| |
| ...................................(amortización + interés)
| |
| 1975..........7 875
| |
| 1976..........8 280.................1 616
| |
| 1977..........9 679.................1 849
| |
| 1978..........12 496...............3 310
| |
| 1979..........19 034...............2 255
| |
| 1980..........27 072...............4 182
| |
| 1981..........35 671...............5 390
| |
| 1982..........43 634...............4 875
| |
| 1983..........45 087...............6 804
| |
| 1984..........46 903...............6 281
| |
| 1985..........48 312...............6 208
| |
| 1986..........52 449...............7 323
| |
| 1987..........58 428...............6 244
| |
| 1988..........58 834...............5 023
| |
| 1989..........65 256...............4 357
| |
| 1990..........62 730...............6 158
| |
| 1991..........65 405...............5 419
| |
| 1992..........68 937...............4 882
| |
| 1993..........65 325...............5 860
| |
| 1994..........75 760...............5 771
| |
| 1995..........99 364...............8 889
| |
| 1996..........111 934............13 054
| |
| 1997..........130 828............18 308
| |
| 1998..........144 050............21 573
| |
| 1999..........147 881............25 723
| |
| Servicio pagado 1976-2000 : 212 280 millones de dólares.
| |
| Economy Minister created a speculative model that destroyed the country’s economy. Most of the loans came from American banks. Every public company was forced to borrow money from these banks. For instance, the main state company, YPF’s external debt went up to $372 million. Seven years later, they were owing $6,000 million. However, the money the company was borrowing wasn’t for them, but for the dictatorship. The military leaders and the IMF were backing up this massive borrowing as a way to increase their reserves in a foreign currency to maintain an open market economy. 83% of these reserves, which were managed by the army, were all deposit in foreign banks.The interest they got from those reserves was still lower than the interest they had to pay for the debt.
| |
| The main purposes of the army were:
| |
| 1) get money for themselves
| |
| 2) increase international reservs to sostein the huge increase in imports, mainly weapons
| |
| 3) the open market model and the debt recommended by the IMF allowed the dictatorship to have a better image with the US.
| |
| The Federal Reserve was encouraging the debt since most of it was deposit in American banks.
| |
| Raul Alfonsin (1983-1989)
| |
| | |
| Democracy was restored in 1983. Raúl Alfonsín's government tried to make up for all the damage and murdered citizens by controlling of the army and consolidating the democracy. However, he failed to resolve the economic problems and to maintain confidence.
| |
| The Central Bank declared that they didn’t have any official record of the external debt. Therefore they had to trust the foreign lenders and the contracts signed by the dictators. However, the new democratic government decided to recognize the debt, public as well as private. The private debt had gone up to more than $14.000 million.
| |
| Carlos Menem (1989-1999)
| |
| | |
| President Carlos Menem imposed peso- dollar fixed exchange rate in 1991 to stop hyperinflation, and adopted far-reaching market-based policies, dismantling protectionist barriers and business regulations, and implementing a privatisation program. These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s.
| |
| | |
| From 1990 to 1992 he started to privatize state companies, selling most of the country’s patrimony and by doing this, $60,000 million were lost. He sold YPF (national oil company), Aerolineas Argentinas (national airlines). All the Boeing 707 were sold by only 1 dólar each. Although the companies were released of their debt when sold to foreign companies, the total debt they owed was taken by the government.
| |
