The Argentine Financial Crisis: A Chronology of Events

The Argentine Financial Crisis: A Chronology of Events

Order Code RL31582
Report for Congress
Received through the CRS Web
The Argentine Financial Crisis:
A Chronology of Events
Updated June 5, 2003
nae redacted
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
nae redacted
Research Associate
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

The Argentine Financial Crisis: A Chronology of Events
Summary
In December 2001, after four years of recession and escalating social unrest,
Argentina’s economy collapsed, forcing the resignation of President Fernando de la
Rua. After a period of short-term presidential successions, on January 1, 2002, the
Argentine Congress selected Eduardo Duhalde to complete de la Rua’s December
2003 term. Duhalde then struggled to resolve Argentina’s deep-seated economic and
political problems. The seeds of Argentina’s financial and political crisis were
planted in 1991 with adoption of a currency board to fight hyperinflation, a plan that
rested on the guaranteed convertibility of peso currency to dollars at a one-to-one
fixed rate. Argentina, however, proved unable to enforce the economic policies
needed to support the convertibility plan and when beset by numerous external
shocks, went from prolonged recession to financial crisis, including defaulting on
$151 billion of debt, despite repeated financial assistance from the International
Monetary Fund (IMF).
Argentina’s economy resumed growth in late 2002, quicker than many had
predicted. By 2003, however, it was clear that many problems persisted, most
notably high rates of unemployment and poverty. The country’s financial problems
also remain unresolved. Argentina faces a large debt workout with private creditors
and has been unable to come to terms with the IMF over a medium-term financial
assistance package. On January 16, 2003 the IMF agreed, with some reservations,
to a new transitional $6.8 billion arrangement, supported by the United States and
other G-7 countries as necessary for Argentina to avoid defaulting on the IMF. The
IMF arrangement had few new conditions and provided sufficient financial resources
only to “roll over” Argentina’s IMF repayments through August 2003. The
program’s designers assumed that a medium-term IMF arrangement could be put in
place by September 2003, when a nearly $3 billion payment comes due.
On May 25, 2003, Governor Néstor Kirchner was inaugurated President of
Argentina in what was widely considered a fair election with high voter turnout. His
administration faces daunting long-term problems as well as dealing with short-term
needs, such as negotiating a new IMF agreement. To meet its multiple obligations,
Argentina will have to face calls from the IMF and others to impose strict fiscal
measures, redefine its federal/provincial fiscal relationship, reassess its tax structure,
restructure its banking system and utility rate contracts, and face head on debt
restructuring, among other painful policy choices. Under these conditions, it remains
to be seen if Argentina is on a true path to political and economic recovery, or merely
biding time. This is the final version of this report, which provides a summary of
events from before Argentina’s adoption of the currency board in 1991 to the May
25, 2003 inauguration of President Kirchner.

Contents
Chronology of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1980s - 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Postscript . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The Argentine Financial Crisis: A
Chronology of Events
Argentina’s financial crisis resulted from a confluence of events over time, some
external to Argentina’s policy process, others directly related to its political and
economic choices. Although it is debatable when the precise point of no return was
reached, it is clear that by early 2001 political, economic, and social events had taken
a significant turn for the worse and that by December 2001 a full blown financial and
political crisis had emerged.1 The seeds of the crisis were planted with the decision
to adopt a currency board in 1991, a strategy conceived by then-President Carlos
Menem to fight hyperinflation. The strategy rested on an exchange rate regime that
legally guaranteed the convertibility of peso currency to dollars at a one-to-one fixed
rate.
The long-term success of Argentina’s monetary arrangement hinged on
continuing economic growth and disciplined macroeconomic policies, both of which
were absent by the mid-1990s. Add poor policy choices and an inhospitable
international economic environment and Argentina’s economy began to unravel.
Social unrest escalated, particularly after a freeze was placed on bank withdrawals,
which forced President Fernando de la Rua to resign from office on December 20,
2001. In 2002, Argentina struggled under the congressional presidential selection of
Senator Eduardo Duhalde, who oversaw the demise of the currency board and the
resulting deep financial repercussions. For most of 2002, Duhalde’s government was
unable to come to terms with the International Monetary Fund (IMF) or gain the
political trust of the Argentine people.
By 2003, economic and political trends became more settled and economic
growth had resumed. On January 24, 2003, the Executive Board of the IMF
approved a $6.8 billion interim program that covered Argentina’s obligations to the
Fund through August 2003, and also made way for additional assistance from the
World Bank and Inter-American Development Bank (IDB). On May 25, 2003,
Governor Néstor Kirchner was inaugurated President of Argentina in what was
widely accepted as a fair election with heavy voter turnout. Argentina now finds
itself at the crossroads. In the short term, it faces negotiating a new IMF arrangement
before a $2.7 billion payment comes due IMF in September 2003. Over the longer
term, the government must address its huge foreign debt default, the call for broad
government reforms, and the imperative for devising a long-term economic strategy,
a daunting challenge for the new administration.
1 For a more detailed discussion of events leading up to the crisis, see CRS Report No.
RS21072, The Financial Crisis in Argentina, by (name redacted).

CRS-2
Chronology of Events
The following is a summary of events from before Argentina’s adoption of the
currency board in 1991 to developments through the May 25, 2003 presidential
inauguration. It concentrates on the 18-month period beginning in December 2001,
a time during which the financial crisis peaked, followed by Argentina’s movement
toward political and economic stability. The report concludes as Argentina enters a
new and unsure chapter in its national rebuilding and will not be updated.2
1980s - 1998
1980s
Argentina suffers through an extended period of economic instability
including hyperinflation and the Latin American debt crisis.
1989
Peronist candidate Carlos Menem is elected President of Argentina
and in 1991 appoints Domingo Cavallo as Minister of Economy.
They enact a major structural adjustment program including tax
reform, privatization, trade liberalization, deregulation, and adoption
of a currency board.
April 1, 1991 Argentina’s Congress enacts the Convertibility Law, which legally
adopts the currency board guaranteeing the convertibility of peso
currency to dollars at a one-to-one fixed rate and limiting the printing
of pesos only to an amount necessary to purchase dollars in the
foreign exchange market. Effectively, each peso in circulation is
backed by a U.S. dollar and monetary policy is forcibly constrained
to uphold that promise.
1991-94
Argentina enjoys strong economic growth and the currency board is
considered highly successful.
1995
Following Mexico’s December 1994 peso devaluation, capital flows
out of emerging markets. Argentina’s GDP declines by 2.8%.
May 1995
Menem is reelected President after convincing Congress to change
electoral laws that prohibit a second term.
1995-1999
The U.S. dollar experiences a prolonged period of real appreciation,
resulting in similar appreciation of the peso relative to the currencies
of Argentina’s trading partners.
1996-1997
Renewed period of Argentine economic growth (5.5% in 1996, 8.1%
in 1997), but current account deficit and debt measures worsen.
July 1997
East Asian financial crisis begins with devaluation of the Thai bhat.
2 The events compiled here are drawn from standard news sources and from documents on
the Web page of the International Monetary Fund (IMF) at [http://www.imf.org/].

CRS-3
1998
Asian financial crisis moves to Russia and Brazil. Argentina enters
a four-year recession in the third quarter and unemployment begins
to rise.
1999
January 15
Brazil, facing its own financial crisis, devalues its currency, causing
Argentine exports to its largest external market to fall dramatically.
September
The Argentine Congress passes the Fiscal Responsibility Law,
committing to large reductions in both federal and provincial
government spending.
October 24
Fernando de la Rua of the Radical Civic Union (UCR), the opposition
coalition candidate, running on a platform to end corruption and the
recession, defeats Peronist candidate Eduardo Duhalde for President.
December 10 De la Rua is inaugurated President of Argentina and shortly thereafter
seeks assistance from the IMF. The spread on Argentina’s bonds, a
measure of risk in the financial markets, is 610 basis points (6.1
percentage points) above U.S. Treasury bonds.
2000
March 10
The IMF agrees to a three-year $7.2 billion stand-by arrangement
with Argentina conditioned on a strict fiscal adjustment and based on
the assumption of 3.5% GDP growth in 2000 (economy actually
declined by 0.8%).
May 29
The government announces $1 billion in budget cuts in expectation
that fiscal responsibility will bring renewed confidence to economy,
but triggers 20,000-person protest.
September 15 The IMF concludes an Article IV Consultation, the required annual
comprehensive review of member country economies.
October 6
Vice President Carlos Alvarez resigns over de la Rua’s decision not
to replace two cabinet members linked to a Senate bribery scandal.
December 18 The de la Rua government announces a $40 billion multilateral
assistance package organized by IMF (see below).
2001
January 12
Argentina’s continued weak economic performance prompts the IMF
to augment the March 10, 2000 agreement by $7.0 billion as part of
a $40 billion assistance package involving the Inter-American
Development Bank (IDB), the World Bank, Spain, and private

CRS-4
lenders. The agreement assumed GDP would grow by 2.5% in 2001
(it actually declined by 3.7%).
March 2
Ricardo Lopez Murphy is appointed Minister of Economy and
immediately unveils financial austerity package, which is highly
unpopular.
March 19
Domingo Cavallo, again becomes Minister of Economy under
Menem, replacing Ricardo Lopez Murphy in response to his
insistence on fiscal austerity.
June 16-17
The de la Rua government announces a $29.5 billion voluntary debt
restructuring in which short-term debt is exchanged for new debt with
longer maturities and higher interest rates.
June 19
The peso exchange rate is adjusted for an effective 7% devaluation
for foreign trade, intended to improve Argentina’s international
competitiveness, but raising doubts over the convertibility regime’s
credibility.
July 10
Cavallo announces a plan to balance the budget, but markets react
negatively, expressing lack of confidence. The spread on Argentine
bonds expands to 1,300 basis points over U.S. Treasuries.
July 19
Unions call a nationwide strike to protest government austerity plan.
July 29
The Argentine Congress passes the “Zero Deficit Law,” requiring a
balanced budget by the fourth quarter of 2001.
September 7
Based on Argentina’s commitment to implement the “Zero Deficit
Law” immediately, the IMF augments its March 10, 2000 agreement
for a second time, increasing its lending commitment by another $7.2
billion.
October
The use of provincial bonds as “scrip” to pay public salaries becomes
widespread as federal revenue transfers decline.
October 14
The opposition Peronist Party wins control of both chambers of
Congress in mid-term elections.
November 6
Argentina’s second bond swap ($60 billion) reduces average interest
rate from 11-12% to 7%, but is deemed an “effective default” by
international bond rating agencies.
November 30 Bank runs begin with over $1.3 billion in bank withdrawals.
President de la Rua imposes $1,000 per month limitation on bank
withdrawals.
December 1
Protests begin over bank withdrawal limitations.

CRS-5
December 5
The IMF withholds $1.24 billion loan installment, citing Argentina’s
repeated inability to meet fiscal targets.
December 7
Argentina announces it can no longer guarantee payment on foreign
debt.
December 13 Unemployment rate hits 18%, unions go out on a nationwide strike.
December 14 Supermarket looting begins.
December 19 Rioting spreads to major cities over deep budget cuts. The
government declares a state of siege. Minister of Economy Domingo
Cavallo resigns.
December 20 President de la Rua resigns and continued rioting leaves 28 people
dead.
December 21 Congress accepts President de la Rua’s resignation. Senate President
Ramon Puerta is named provisional president for 48 hours.
December 23 Congress appoints San Luis Governor Adolfo Rodriguez Saa as
interim president until elections can be held in March 2002.
December 26 Bank liquidity standards are relaxed. Rodriguez Saa announces a
new economic plan based on: 1) suspension of payments on public
debt (the largest sovereign in history); 2) a new jobs program; and 3)
creation of new currency (the Argentino) to begin circulating in
January 2002, but not convertible to the U.S. dollar.
December 30 President Rodriguez Saa resigns after continued rioting and loss of
party support. Senate leader Puerta resigns to avoid second
appointment as interim president. No immediate presidential
successor emerges.
December 31 The Argentine Congress selects Peronist Senator Eduardo Duhalde
to complete December 2003 Presidential term.
2002
January 1
Senator Duhalde sworn in as President. He blames Argentina’s
economic problems on the free-market system and vows to change
economic course.
January 6
Following legislative action providing President Duhalde with
emergency powers, he announces the end of the currency board and
unveils a plan to devalue the peso by 29% for major foreign
commercial transactions, with a floating rate for all other transactions.
Other elements include: conversion of all debts up to $100,000 to
pesos (passing on devaluation cost to creditors); capital and bank

CRS-6
account controls; a new tax on oil to compensate creditors for the
losses they will incur; renegotiation of public debt; and a balanced
budget.
January 10
Government announces it will “guarantee” dollar deposits, but to
curtail bank runs, the $1,000 (1,500 peso) limit on monthly
withdrawals is maintained and all checking and savings accounts with
balances exceeding $10,000 and $3,000, respectively, will be
converted to certificates of deposit and remain frozen for at least one
year.
January 16
The IMF approves request for one-year extension on $936 million
payment due January 17, keeping Argentina from falling into arrears.
January 17
The government announces that dollar denominated loans exceeding
$100,000 will be converted to pesos at a 1.4 fixed rate, deepening the
balance sheet mismatch of banks.
January 19-20 President Duhalde reverses his decision to guarantee dollar deposits.
January 21
President Duhalde appoints Mario J. Blejer, a former IMF official, as
Governor of the Central Bank of Argentina.
January 23
The Argentine Senate passes a bankruptcy law that would restrict
payment of foreign private debt payments through December 2003.
January 28-29 Foreign Minister Carlos Ruckauf visits with Bush Cabinet members
to appeal for political and financial support (specifically including
IMF assistance).
January 30
IMF team meets with Argentine officials, who declare intention to
adopt a floating exchange rate. The Chamber of Deputies passes a
new bankruptcy law, dollar denominated debt below $100,000 to be
converted to pesos at a 1-to-1 rate, and creditor action against loan
defaults is suspended for 180 days.
February 1
Argentine Supreme Court rules that government restrictions on bank
deposit withdrawals are unconstitutional.
February 3
The Argentine government closes foreign exchange markets, declares
an end to dual exchange rate system in favor of a floating peso, and
requires all deposits to be converted to inflation-indexed peso
accounts at the previous official rate of 1.4 to the dollar. The dollar
ends as an official circulating currency.
February 4
By decree, Duhalde eases restrictions on bank withdrawals, but places
a six-month moratorium on enforcement of Supreme Court order.
Congress moves to impeach all nine members of the Supreme Court.

CRS-7
February 5
Duhalde presents 2002 federal budget to congress calling for 15% cut
in expenditures, including agreement with provincial governments to
reduce the number of Chamber of Deputies and their staff by 25%.
February 11
Foreign exchange market opens for first time with a free floating
peso, which depreciates 20% to 2.5 to the dollar before rebounding
to 1.9 to 2.2.
February 13
The government announces that a 20% energy export tax will be used
for general government expenditures rather than dedicated to bond
repayments to support banking system, as originally promised.
February 14
In meeting with IMF officials, Argentine representatives suggest that
the country will need $22-23 billion in assistance.
February 18
Petroleum industry workers begin strike to protest energy export tax.
Unemployment reaches 22%, general protests erupt into violent
attacks on banks over continued restrictions on withdrawals.
February 27
Provincial governors sign budget accord calling for 60% cut in
provincial deficits, assumption of their debt by the federal
government, and change in revenue sharing agreement from
guaranteed minimum payments to a system of based on a percentage
of federal tax collection.
March 4
In addition to the existing 20% tax on energy exports, the government
declares a 10% tax on farm exports and 5% tax on manufactured
exports, with proceeds to be used to bolster social programs.
March 5
The government announces its will issue $44 billion in dollar- and
peso-denominated bonds to banks and depositors for losses incurred
from the mismatch in peso conversion between loans and deposits.
March 6
The fiscal year 2002 budget passes Argentina’s Congress.
March 15
IMF 10-day mission to Argentina ends. Officials express support for
Argentina, but raise concerns over plans for fiscal adjustment, the
new bankruptcy law, and continued use of scrip for deficit financing.
April 18
Scotiabank (Canada) becomes first bank to cease operations.
April 24
President Duhalde and provincial governors sign a 14-point plan that
meets all the major IMF goals needed for lending to resume.
April 28
Roberto Lavagna confirmed as Minister of Economy, replacing Jorge
Remes Lenicov after Congress rejects the latter’s plan to convert
saving accounts to bonds.
April 29
Banks reopen after a one-week forced closure following bank runs.

CRS-8
May 11-13
Argentina uses foreign exchange reserves to make $159 million
repayment to IMF and $680 million repayment to the World Bank.
May 16
Argentina bankruptcy law amended to meet IMF guidelines.
May 19
State-owned Banco Nacion takes over three French banking affiliates,
portending a deeper banking system crisis.
May 21
IMF grants a one-year extension on $130 million payment due.
Argentina is scheduled to repay $4.8 billion to IMF in 2002.
May 22
Economy Minister Lavagna meets with IMF Managing Director Horst
Koehler, who suggests the need for further reform. Argentine peso
sinks to 3.6 to the dollar, down 72% since the financial crisis began.
May 23
Some 4,000 workers strike before the presidential palace in the first
major union protest since Duhalde became president.
David de Ferranti, World Bank Vice President for Latin America and
the Caribbean, and Argentina’s Economy Minister Roberto Lavagna
meet to discuss Argentina’s economic situation.
May 27
President Duhalde gives permission for Argentina’s 23 provinces to
issue scrip to pay state employees and government vendors until
2003.
May 28
Argentina’s Economy Ministry and executives of the Bank of Tokyo
Mitusbishi and Shinsei Bank Ltd. meet to discuss the restructuring of
$2 billion worth of outstanding Samerai bond.
June 7
The Government of Argentina declares an emergency on diesel fuel
supplies. The government permits export limits and lifts the tax on
diesel fuel in an effort to keep the domestic market supplied.
June 14
At the 2002 Halifax Summit, the G7 Finance Ministers meet to
discuss changes to international financial institutions and to discuss
Argentina’s financial crisis.
June 25
Aldo Pignanelli takes over as president of Argentina’s Central Bank.
June 26
In response to the government’s IMF-oriented economic policy,
protestors convene on the Pueyrredon Bridge, between Buenos Aires
and Avellaneda, resulting in 90 injuries and 2 deaths.
Argentina’s Economy Minister Roberto Lavagna announces that
Argentine utilities can expect tariff adjustments to be progressive.
Argentina’s four mobile operators (Telecom Personal, Unifon, CTI
Movil, Movicom Bellsouth) raise rates up to 15% to offset losses
from the devaluation of the peso.

CRS-9
President Eduardo Duhalde appoints Aldo Piganelli as the new
Central Bank Governor to replace Mario Blejer.
July
The Independent Advisory Group on Argentina meets with Argentine
officials to suggest changes in monetary policy. The group consists
of: Mr. Andrew Crockett, General Manager of the Bank for
International Settlements; Mr. John Crow, former Governor of the
Bank of Canada; Mr. Luis Angel Rojo, former Governor of the Bank
of Spain; and Mr. Hans Tietmeyer, former President of the Deutsche
Bundesbank.
President Duhalde moves presidential election forward by six months
to March 30, 2003.
July 16
The Argentine government ends its plan initiated June 18 for
voluntary bank deposits-for-bonds swap to help transition away from
the bank freeze. Only 25% of depositors responded to the offer. The
IMF pushed for a similar, but compulsory exchange of bank deposits
for bonds to end the bank freeze.
July 29
The Independent Advisory Group on Argentina submits their report,
entitled “Economic and Financial Issues Facing Argentina,” to the
Government of Argentina and the IMF, concluding that Argentina
should adopt: 1) a monetary anchor to achieve price stability; 2) a
formal inflation targeting policy, and; 3) a fully credible independent
central bank.
August 7
U.S. Secretary of the Treasury Paul O’ Neill visits Argentina to meet
with President Eduardo Duhalde and Economy Minister Robert
Lavagna.
August 25
The Bush Administration restores $126 million in duty-free benefits
to Argentina under the Generalized System of Preferences (GSP).
September 5
The Executive Board of the IMF grants Argentina a one-year
extension on a $2.8 billion payment due September 9.
September 12 Consumer confidence falls to a record low, declining 4.48 points to
28.34 on a 100-point scale, marking a 13.6% decline since last year.
September 13 The Argentine Appellate Court rules that the government’s freeze on
peso-denominated bank accounts (the corralito financiero) is
unconstitutional.
President Eduardo Duhalde allocates $4.0 billion in his draft 2003
budget to pay debt owed to multilateral lenders.

CRS-10
September 17 President Eduardo Duhalde issues decree to extend the period in
which the Economy Ministry and public utility contract holders can
negotiate rate hikes.
September 19 Government statistics show that GDP decreased by 15% (annualized
basis) in the first half of the year. Four-year recession and financial
crisis reported as having cost Argentina ten years of economic
growth.
September 22 The delay in receiving IMF assistance continues over the Fund’s
demands for a coherent economic plan. Argentine government
representatives remain critical of IMF. President Duhalde announces
that lack of political consensus over the economy is delaying the IMF
arrangement, which is expected to continue until after the March
2003 elections. Private debtors warned not to expect resolution on
debt workout until after IMF agreement is concluded.
September 24 Economy Minister Lavagna announces that Argentina will use its
diminishing foreign reserves to make $2.2 billion worth of payments
due to multilateral institutions this year only if an IMF agreement is
in place. Argentina is scheduled to make an $800 million payment to
the World Bank in October 2002. A default would fully isolate the
country from all international financial lending.
September 25 The Argentine government gives banks $8 billion worth of bonds to
help compensate them for losses incurred with the uneven conversion
of banks assets and liabilities related to the January 2002 devaluation.
September 26 Anne Krueger, First Deputy Managing Director of the IMF, warns
that multilateral institutions would cut off humanitarian aid to
Argentina if it defaults on its payments to them.
October 15
The World Bank pays $250 million under its guarantee of the Series
D zero coupon bond that Argentina is unable to pay.
October 16
The World Bank reallocates $140 million from existing loans to
support Argentina’s Social Emergency Program that maintains
essential public health and education programs.
October 18
President Duhalde, after a lengthy period of uncertainty surrounding
proposed early elections, requests the Congress to accept his
resignation effective May 25, 2003 and set general elections for
March 30.
November 4
Economy Minister Roberto Lavagna meets with IMF First Deputy
Managing Director Anne Krueger to continue negotiations over the
$805 million debt payment due to the World Bank the second week
in November.

CRS-11
November 14 Argentina pays $79 million interest payment to the World Bank, but
fails to make the $726 million payment on principal originally due
October 15, 2002. With the end of the 30-day grace period,
Argentina will be officially cut off from further World Bank lending.
November 15 The government of Argentina lowers its value added tax (VAT) from
21% to 18%.
November 20 IMF approves Argentina’s request for a one-year extension on a $141
million repayment due on November 22, 2002.
November 22 Daimler-Chrysler AG begins the Grain Plan to allow customers to
exchange grain as payment-in-kind for vehicles.
November 25 President Eduardo Duhalde ends the 11-month restriction on peso-
denominated bank withdrawals (the corralito), affecting $6 billion of
deposits. Restrictions on long-term certificates of deposit and the
freeze on dollar-denominated accounts (the corralon) remain in
effect.
By executive decree, utility rates will rise by 10% for residential and
commercial users, industry will see increases of 12-16%. Prices had
been frozen since January as part of an effort to fight an expected rise
in inflation.
December 2
Restrictions on peso-denominated current bank deposit withdrawals
(under the corralito) are relaxed.
December 5
Aldo Pignanelli resigns as head of the Central Bank.
December 9
President Duhalde appoints Alfonso Prat Gay, 37, as the new
Governor of Argentina’s Central Bank.
December 13 A federal court reduces domestic price increases on utilities that were
decreed by the Duhalde government.
December 18 Argentina makes “good faith” gesture with $124 million payment,
split between the IMF ($28 million), World Bank ($41 million), and
IDB ($55 million), but continues to owe large balances to each.
December 19 Talks with IMF on new arrangement break down over Argentina’s
refusal to pay $805 million arrearage owed to the World Bank.
December 22 IMF announces it will consider an interim arrangement to roll over
Argentina’s repayments due through the presidential election, now set
for April 27, 2003.

CRS-12
2003
January 8
Argentina removes year-old restrictions on foreign exchange trading
(that limited payments for imports and profit remittances) as
requested by the IMF.
January 13-17 Argentina faces $2.7 billion in payments due to the IMF, World
Bank, and Inter-American Development Bank (IDB). Argentina says
it will not make $1 billion payment due to IMF unless an interim loan
can be arranged.
January 15
Argentina misses a $680 million payment to the IDB, already 30 days
in arrears, causing a technical default. In light of pending IMF
program, the IDB gives Argentina a two-week extension.
January 17
Argentina makes $1.065 billion payment to IMF after reaching an
interim $6.8 billion agreement, pending approval by the IMF
Executive Board. Financing covers payments due to the IMF through
August 2003.
January 22
Duhalde government issues decree overruling December court
decision on limiting utility rate increases.
January 24
The IMF Executive Board formally approves transitional loan to
Argentina.
Argentina pays arrears of $797 million to the World Bank and $770
million to the IDB, making way for the two institutions to roll over
some $4.4 billion owed to them by Argentina through August 2003
and to provide new financing for social programs.
January 28
Argentina receives first installment of $1 billion from IMF and $600
million from the World Bank. Additional funds are promised from
the IDB. IMF assumes Argentina’s economy will grow by 2-3% in
2003 (compared to contracting by 11% in 2002) and that a medium-
term IMF program will be in place by September 2003, when a nearly
$3 billion payment is due from Argentina.
February 11
Court rules that the Peronist Party may field three candidates in the
general election rather than proceed with a primary election,
effectively siding with President Duhalde’s preference over former
President Menem’s.
March 5
The Supreme Court rules in favor of re-dollarizing deposits of San
Luis Province, which sets a precedent for multiple depositor law suits
against the federal government. The court held that personal property
rights protected under the constitution were violated by President
Duhalde’s February 2002 decree forcing “pesification” of deposits.

CRS-13
March 28
President Duhalde signs a decree unfreezing all remaining bank
deposits under the corralon over a three-month time period.
April 1
The Argentine government issues a decree authorizing the Ministry
of Economy to withdraw 4.5 billion pesos of provincial currencies to
gain better control of the country’s monetary stock.
April 8
The Argentine government lifts restrictions on the first portion (6.8
billion pesos) of fixed-term, dollar-denominated bank deposits that
were frozen under the corralon and agrees to issue bonds to
compensate depositors for the difference in value due to the earlier
forced conversion to pesos and inflation.
April 27
The first round of presidential elections ends in a runoff between the
top two contenders. Former president Carlos Menem wins 24% of
the vote, with Governor Néstor Kirchner taking 22%, in what is
widely reported as a fair election with near record voter turnout
(80%). The other three major candidates each receive approximately
15% of the vote.
May 9
The Argentine government begins withdrawing provincial currencies,
replacing them with pesos financed by federal bonds (Bodens).
May 14
Facing very low support in the polls, Menem withdraws from the
second round of presidential elections. He cites inappropriate
electoral conditions as the reason, particularly the court-ordered
bypassing of Peronist Party primaries.
May 23
The IMF announces that failure to complete structural reforms in
Argentina is delaying approval of the second IMF review of
Argentina’s standby arrangement.
May 25
Néstor Kirchner is inaugurated as President of Argentina.
Postscript
This report concludes with the May 25, 2003 presidential inauguration, which
occurred some 18 months after the Argentine financial crisis ended the De la Rua
administration. During this period, Argentina was unable to meet many of its
financial obligations and struggled to regain economic and political stability.
Although Argentina’s economy has stabilized, it remains fragile and deeply indebted
to both private and official creditors. Therefore, although this chapter of Argentina’s
financial crisis appears to be over, returning to a path of growth and prosperity
presents a long-term challenge to the country

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