An alternative view of the argentine crisis: structural flaws and structural adjustmet policy

Abstract: This paper discusses the conventional explanation of Argentina’s crisis. It is argued that the crisis was not, as common wisdom states, the consequence of an inappropiate fiscal policy, but rather of the structural flaws in the stabilization programme introduced at the beginning of the 1990’s. The programme was unable to correct the persistence of large stocks of debt which, in turn, exposed the economy to external shocks and set it on a path of vicious dependence on foreign inflows. The explanation of Argentina’s fall is put into recent historical perspective, and the paper offers a detailed evolution of the government's decisions, the ebbing political conditions as well as an exposition of the workings -and failure- of the so thought automatic adjustment mechanism that was the Currency Board’s alleged main trait. It does so by recalling the emerging markets’ heart-breaking pace during the nineties. Last but, certainly, not least, it provides a reflection of the pending aftermath.