Introduction
It is known that any country’s economy can be influenced by both external and internal factors, which can be beneficial, or on the opposite, deteriorative ones, in a particular situation. At the end of 2001, Argentina was in an economic crisis because of the partial deposit freeze, public debt, and the unsuccessful fixed exchange rate. International Monetary Fund’s (IMF) conditionalities, which had supported the country along with neoliberal policies since the 1970s, proved themselves to be ineffective and led to the depression in national economics. This essay will examine why the IMF conditionalities and the neoliberal measures failed in Argentina, despite them being successful initially.
The Reasons IMF Conditionalities and the Neoliberal Measures Failed
After the end of the period of dictatorship in Argentina, the implementation of neoliberal policies enabled the country to achieve the highest standard of living. IMF supported the trajectory along with the military junta, and such neoliberal measures as privatization of public enterprises and social security and trade liberalization were useful before the 1990s. However, after the transition to democracy and the implementation of heterodox economic policies, the existing approaches became deteriorative ones that are resulting in the crisis of hyperinflation. Failures in fiscal policy, which is the responsibility of IMF, were raised because of the significant part of foreign debt in Argentina’s fiscal budget.
Conclusion
Initially, the IMF conditionalities were successful, complimenting the switch from dictatorship to neoliberalism. Simultaneously, Neoliberal Measures in Argentina enabled the country to achieve a high level of living. However, after another switch to democracy, and because of the considerable amount of foreign funding resulting from inappropriate IMF fiscal policy, the outdated approaches became ineffective. Therefore, previously successful measures and conditionalities only contributed to the crisis of hyperinflation.