Argentina
By Important story on Argentina in today’s NYT.
But three years after Argentina declared a record debt default of more than $100 billion, the largest in history, the apocalypse has not arrived. Instead, the economy has grown by 8 percent for two consecutive years, exports have zoomed, the currency is stable, investors are gradually returning and unemployment has eased from record highs – all without a debt settlement or the standard measures required by the International Monetary Fund for its approval.
Argentina’s recovery has been undeniable, and it has been achieved at least in part by ignoring and even defying economic and political orthodoxy. Rather than moving to immediately satisfy bondholders, private banks and the I.M.F., as other developing countries have done in less severe crises, the Peronist-led government chose to stimulate internal consumption first and told creditors to get in line with everyone else.
Wait, are you suggesting that IMF policy recommendations may have more to do with securing the interests of international lenders than with restoring economic security to developing countries? The hell you say!!
It’s no secret that IMF recommendations rarely have their purported effect. But Argentina’s reversal is truly remarkable. Three years ago, Argentina was a basket case, and now we’re seeing strong growth. Of course, this growth may not be sustained, but we don’t need to be fooled into thinking that what’s good for international creditors is also good for international debtors. There’s more than one path to a healthy economy, and radical deregulation combined with fiscal austerity quite likely leads nowhere at all.