Alfonsín

President Alfonsín successfully brought human rights back; and made the case for trade liberalization, deregulation, and privatization. However, Alfonsín lacked the leadership skills necessary to carry out the economic reforms he sought. For example, the government proposed Plan Austral in 1984, with the support of the IMF, to impose fiscal discipline and control skyrocketing inflation of 627 percent that year.

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 U$U 14.000 million.

Hyperinflation

Inflation rose to 672% in 1985, and government expenditures increased from 11% of GDP in 1984 to 18% in 1985. A IMF-sponsored program, Plan Primavera, was sort of successful for a while:

• Government expenditures falling from 16% of GDP in 1986 to 11% in 1988.
• Inflation fell briefly to 90% in 1986 before rising to 343% in 1988.

However, in April 1988, Argentina found itself way behind its external debt payments. Inflation reached 28% per month. So Alfonsin tried to fix prices. This didn't work due to lack of trust. In 1989, the World Bank suspended the aid that it was giving to Argentina. Immediately, everyone started buying US dollars.

Alfonsin resigns

The failure of the Argentine government to respond effectively to its economic problems contributed to an erosion of investor confidence, massive capital flight, devaluation of the peso, and hyperinflation of 3,080 percent in 1989 and 2,314 percent in 1990. Alfonsín resigned five months before the end of his term in 1989 and yielded power to Carlos Menem.

Sources

Heritage Foundation
ATTAC Argentina
Duke University

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Introduction | Dictatorship | Carlos Menem | Fernando de la Rúa

Interim Presidents | Néstor Kirchner | Graphs | Final Analysis