Many people have suggested solutions to Argentinas economic problems. But few have suggested solutions that would actually be beneficial in the long run. This has been illustrated by the many presidents and economic ministers that Argentina has faced in the last few years. Even the IMF failed to realize Argentinas true problem: their huge debt, not their deficit. Therefore, to solve their problems, they must first realize the cause: the foreign debts. To ease the strain, the IMF can renew their loan to the Latin American country to increase investments and lower risks. As people and investors become less wary of the future of Argentina, the economy will slowly stabilize with the lowering of interest rates. As more money is being invested into the country, production would increase which in turn would decrease unemployment. However, the government must be careful not to deflate the currency too quickly nor to use its newly acquired resources in some drastic action, such as the incident with the manufacturing companies in its past. Argentina would then slowly come out of its deep recession. However, the key point is slowly. As mentioned previously, short-term gains can lead to devastating long-term effects. Therefore, a slow and steady solution is one answer that Argentina should consider. The once vicious cycle can become a prosperous one.
Around the mid 1990s, Argentinean investors and citizens became wary of the governments attempts to solve the economic debts. Therefore, many large investors began pulling money out of the country while citizens began to send their money to foreign banks. This was a part of the Mexican banking crisis (also known as the Tequila crisis). In addition, in the year of 2001, the IMF decided to cease their aid to Argentina. With all these factors troubling Argentina at the same time, it was no wonder that the countrys debt had reached over 52 percent of its GDP and their economy was in a deep recession with high unemployment rates and high poverty levels.
When the Argentinean government privatized the companies, they thought that revenue and profits would occur quickly and naturally. But in reality, the state owned monopolies became private owned monopolies. Not only were they still monopolies, but also they were foreign owned. Therefore, any money gained did not end up back into the country, but rather to foreign countries. Also by fixing the peso to the dollar, the Argentinean government believed that they would have a more stable currency. This, in fact, was true. Inflation stabilized over zero percent. However, it also meant that Argentina was not allowed to pass any monetary policies to allow the economy to become flexible to any blows. Unfortunately, this was just the case.
I wish that I am able to type in Thai but that's only a wish because I can't.
Still, I want to join in some of the discussion here with you to exchange the information.
I hope, you don't mind.
25 เม.ย. 47 21:13:14