Argentina's economic issues are resultant of foreign entities' attempts to develop the nation.
In the early 1990's, Argentina was the flag bearer for globalization. The South American nation was poised to emerge onto the global financial, political and cultural stage alongside powerful allies like the United States, to set an example for the benefits of partnering with the global powers that be. However, things went terribly awry. Argentina fell into one of the worst financial downturns of the 21st century and now grapples with serious economic issues.
Economic Crisis
The root of all key economic issues in contemporary Argentina can be traced to the country's mammoth financial collapse and resultant economic crisis at the beginning of the 21st century. In 1991, the Argentine president attempted to secure the country's peso against inflation by pegging it to the U.S. dollar. In the late 1990's, the country went into a four-year recession, which was exacerbated when Argentine citizens, worried that the recession would devalue the peso, began withdrawing huge amounts of American dollars, which was made possible by the pegging of the former currency to the latter, from banks. To worsen matters, the country's government, at the behest of the World Bank, transferred its social security holdings to private accounts. This move is estimated to have cost the government enough money to be solely responsible for Argentina's enormous debt.
Pre-Crisis Loans
Argentina's economic crisis was aided and abetted by impractical interest rates and repayment schedules that the nation received on loans that pre-date the country's financial crisis. It is partially on account of this bad record of debt that the IMF and other similar institutions refused to step in on the nation's behalf as the recession worsened in the late 1990's. N stor Kirchner, elected president of Argentina in 2003, was able to create a deal with the holders of these pre-crisis loan debts, setting repayments at 34 cents on the dollar, thus reducing Argentina's debt by approximately $67 billion. Working to repay these loans in a timely fashion is a key economic issue for Argentina.
Post-Crisis Loans
In the wake of the economic collapse, Kirchner was able to secure a loan of $12.5 billion from the IMF. However, despite steady economic growth throughout Argentina, the repayment of this loan within the allotted time frame would have meant depleting the economic resources and stability the loan had helped develop. The country eventually agreed to set a schedule on which to repay $9.5 billion of the loan. In the summer of 2010, the China Development Bank agreed to loan Argentina $10 billion to build new metro systems and railway infrastructure. A key economic issue in contemporary Argentina, then, is balancing the incoming loans with a sensible repayment schedule to avoid overburdening debt.
Issues with Economic Freedom
Economic columnist and expert James Roberts, a research fellow at The Heritage Foundation for economic freedom and growth, posits that despite steady growth since Kirchner's ascendancy to president, and the subsequent election of his wife as his successor, the nation's key economic issue is its growing lack of economic freedom. As proof of this, Roberts points to The Wall Street Journal/Heritage Foundation's Index of Economic Freedom, on which Argentina ranks 135th out of 179 nations, as of April 2010. Among other problems, Roberts points to what he sees as excessive bans on imports and exports, a lack of transparency in business, unfairly high taxes, inflexible labor regulations, and "crony capitalism," a system by which Argentina's government only permits close associates to access the nation's markets.
