Dictatorship
Dictatorship (1976-1983)
When Argentina's debt started growing
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 inhuman torturing measures and censorship. Most of the military repressors were trained in the U.S. financed School of the Americas.
By then, the external debt was only U$S 6 billion. The new economy minister, Martinez de Hoz, immediately after seizing power, implemented a series of highy destructive and illegal economic and financial policies making the debt increase from 6 to U$S 46 billion. However, all this cash in-flow was not invested in infraestructure, but in speculative markets.
This speculative model destroyed the country’s economy. Most of the loans came from American banks. Every national company was forced to borrow money from these banks. One example was the largest national company, YPF’s external debt went up to U$S 372 million. Seven years later, they were owing U$S 6,000 million. However, the money the company was borrowing wasn’t for them, but for the regime. 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 dictators were:
- Get money for themselves.
- Increase international reserves to sostein the huge increase in imports, mainly weapons.
- 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.
//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.
Introduction | Raúl Alfonsín | Carlos Menem | Fernando de la Rúa
Interim Presidents | Néstor Kirchner | Graphs | Final Analysis
