Dictatorship

Dictatorship (1976-1983)

When Argentina's debt started growing

An illegal and de facto military-civilian regime ousted the constitutionally elected government of president María Isabel Martínez de Perón ([5]), seizing power at a time when Argentina’s Foreign Debt posed little or no problem. At just under u$s 6 billion, it represented but a small portion of Gross Domestic Product. The Military Junta immediately named as economy minister, José Martinez de Hoz, who had close ties with, and the respect of, powerful international private banking interests. With the Junta’s full backing, he systematically implemented a series of highly destructive, speculative, illegitimate - even illegal - economic and financial policies and legislation, which increased Public Debt almost eightfold to u$s 46 billion in a few short years, This intimately tied-in to the interests of major international banking and oil circles which, at that time, needed to urgently re-cycle huge volumes of “Petrodollars” generated by the 1973 and 1979 Oil Crises. Those capital in-flows were not invested in industrial production or infrastructure, but rather were used to fuel speculation in local financial markets by local and international banks and traders who were able to take advantage of very high local interest rates in Argentine Pesos tied to stable and unrealistic medium-term US Dollar exchange rates. This guaranteed insiders having the right connections enormous financial profits for their short and medium-term “investments”([6]).

An illigal military regime took power in 1976, with Rafael Videla as a leader, ousting the constitutionally elected government. 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.

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.

---

Introduction | Raúl Alfonsín | Carlos Menem | Fernando de la Rúa

Interim Presidents | Néstor Kirchner | Graphs | Final Analysis