History of the Argentine foreign debt

The history of the Argentine foreign debt is the evolution of the debts contracted by the Argentine State, with public or private creditors located in other countries, from its independence in 1816 to the present day. It includes both private external debt, as well as public external debt or sovereign debt. Companies and inhabitants with creditors located within the country (internal debt). The magnitude of the external debt is usually related to the country's GDP or the balance of the trade balance (difference between exports and imports), in order to perceive the payment capacity. The external debt is characterized by being contracted in foreign currencies and cannot be canceled in national currency. For this reason, it has been explained that "more important than studying the residence of the creditor is to analyze the type of bond that the creditor owns and, particularly, if it, before the deferral or suspension of payment, is governed by national legislation or courts" foreign, due to the "fundamental importance (which they have) for the analysis of debt restructuring alternatives".

Argentina is part of various multilateral credit organizations: the International Monetary Fund (since 1956), the World Bank (1956) and the Inter-American Development Bank (1959).

The country defaulted on its external debt six times throughout its history: the first two times in the century XIX (1827 and 1890), and after almost a century without defaults, the Latin American debt crisis in 1982, the 2001 crisis, the trial of the vulture funds in 2014, and the « reprofiling" and subsequent renegotiation of the debt in 2019-2020. Some authors add to this list the provincial defaults of 1915 and 1930, the agreement with the Paris Club of 1956 and the Bonex Plan of 1989 By the end of the first quarter of 2022, Argentina's gross external debt registered a value of 274,355 million dollars, equivalent to half of its annual GDP towards the same date.

19th century

The Baring Brothers Loan

Minister Bernardino Rivadavia (1780-1845), as a leading member of the Bosnian Government between 1821 and 1824, was responsible for debting the country with the Baring Brothers Entrepreneurship.

The history of Argentine public debt begins when the Board of Representatives of Buenos Aires sanctions on August 19, 1822 a law that empowered the Government to acquire a loan that was to be used for the construction of the port of Buenos Aires, the establishment of towns on the new frontier, and the founding of three cities on the coast between Buenos Aires and the town of Carmen de Patagones. In addition, the city of Buenos Aires had to be provided with running water. Manuel José García, Bernardino Rivadavia's Minister of Finance, considered a loan of 2,800,000 pounds sterling necessary.

The Board of Representatives had authorized the placement at a minimum rate of 70%, but Rivadavia agreed to form a consortium that would represent the Government of Buenos Aires for the placement of the loan at a rate of 70%. This consortium was headed by Messrs. Braulio Costa, Félix Castro, Miguel Riglos, Juan Pablo Sáenz Valiente and the Parish Robertson brothers, who, by virtue of the conferred power of attorney, entered into the agreement in London with the firm Baring Brothers & Co. As the placement in the market would be easy, Baring proposed to the consortium to place them at 85%, paying 70% to Buenos Aires and sharing the 15% difference with the consortium.

On July 1, 1824, the government of Rivadavia contracted a loan of 1,000,000 pounds sterling with Banca Baring for reasons of financing public works. The 15% placement difference represented 150,000 pounds; of these, the consortium as a whole took £120,000 as a commission and the remaining £30,000 went to Baring.

The State of Buenos Aires for its part "pawned all its effects, assets, income and land, mortgaging them for the exact and faithful payment of the said sum of 1,000,000 pounds sterling and its interest." Consequently, in 1828 the naval squadron was liquidated and two frigates that were being built in England were given in payment. Thus, when the Malvinas Islands were occupied by the British five years later, there was no naval force to counter it. Ferdinand White, an English spy sent by Baring to the Río de la Plata, condemned the criminal aspects of this agreement. Of the sum received, only 4% of what was agreed, 20,678 pounds, reached the Río de la Plata in gold.

Since it had not been specified how the money would reach the United Provinces of the Río de la Plata, the consortium informed Casa Baring that the best way was to send bills against prestigious commercial houses that gave guarantees in Buenos Aires. One of those commercial houses was that of Robertson and Costas, members of the consortium. Ultimately, only about £570,000 reached Buenos Aires, mostly in bills of exchange. None of the planned works were carried out with that money, which was delivered to the Discount Bank to give credit to its customers, at interest rates much lower than those paid by the province for that money.

Gold exports, allowed by Rivadavia's free trade policies, quickly depleted national reserves. This represented a big problem, since gold was the medium of exchange of the local economy. Rivadavia establishes the "Banco de Descuento," a central bank to print money. This bank was placed in the hands of private British investors. Bernardino Rivadavia and Manuel J. García, representatives of the Buenos Aires aristocracy, were at the pinnacle of power; British influence is at its peak. Rivadavia requested the position of Minister Plenipotentiary of the United Provinces in France and England and traveled to London to be appointed president of the board of the mining company "River Plate Mining Association". He became, at the same time, President of the United Provinces and director of River Plate Mining.

The difference between the eight million imported and the five exported was covered in cash, which produced a continuous drain of gold and silver (in bars they only left the country in 1822 for a value of 1,350,000 strong pesos), paid to through British loans with high interest rates.

All subsequent governments continued to pay and refinance the debt until it was finally canceled in 1903, eighty years later. For the loan of £2,800,000, they ended up paying £23,700,000, that is, practically 8 times more.

Rosista stage

During the Rosas period, loans were renegotiated and a substantial reduction in interest was obtained, reducing the total amount of the debt by one fifth in 1839. On November 18, 1835, Juan Manuel de Rosas dictated the Law of Customs, which would be in force since January 19, 1836, which breaks with the liberal scheme with a double purpose: first, the defense of Creole manufactures, persecuted since 1809, and second, the revival of agricultural wealth, almost extinct since the same date. The surplus surpluses in the trade balance allowed a decrease in the debt. The law was not limited to favoring Argentine interests. In accordance with the Spanish-American solidarity policy, a product of Rosas's international management, the products of the Banda Oriental and Chile were directly favored: the livestock productions of Uruguay were free of rights and re-shipments for &#34 were not charged either.;cables inside"; in the same way, Chilean products that came by land were not taxable.

In 1844, Rosas reached an agreement with Falconnet: the Argentine Confederation would once again pay the interest on the debt, suspended since the time of Rivadavia, with an 80% haircut. Despite the discount, savers, fearful of never getting paid, celebrated the agreement. Rosas returned to pay interest (with the removal of 80%) and continued to do so in 1852, when he fell in Caseros.

In 1825, in the time of Rivadavia, foreign articles were imported for the value of eight million strong pesos, exporting national products for only five million of the same currency, which left a deficit of three million. From the Customs Law of 1835, exports will go up vertiginously, while imports will do so in a lower proportion. In 1851, on the eve of Caseros, Argentine imports reached 8,550,000 and exports 10,633,525, the trade balance having been in surplus.

Urquiza was subsidized with two million gold francs to carry out the war against Rosas, through clause 6 of the treaty of November 21, 1851.

From Miter to the crisis of 1873

With Bartolomé Mitre, in 1862, the debt took another leap. He first transferred the commitments of the province of Buenos Aires to the Nation and then agreed to another loan with the English bank for an additional 2.5 million pounds, to launch into the war with Paraguay. But, again, of the 2.5 million pounds assumed as debt, the country receives only 1.9 million, due to discounts for "country risk and commissions."

When Mitrismo needs financing for the War of the Triple Alliance, he sends Norberto de la Riestra to London again in search of new funds. He obtains a new loan there for 2,500,000, which, subtracting his expenses and commissions, leaves a remainder of 1,735,703 pounds. At the end of Mitre's Presidency, the foreign debt is close to five million pounds sterling.

In order to finance the conflict, the Government was forced to contract a new loan from British banks, borrowing 3.44 million pounds sterling. Thanks to the conflict, Argentina's external debt amounts to 9 million pounds. At the end of the government of Bartolomé Mitre, the country's finances were devastated and the country was on the brink of default.

Domingo Faustino Sarmiento, who succeeds Miter in the presidency, also borrows to continue the war and "to arm military forces to suppress the uprising in Entre Ríos." At the end of Sarmiento's government, the debt already reached 14.5 million pounds. The figures show a permanent growth of the external debt since the last decades of the century XIX until WWI.

The crisis of 1873

After several years of prosperity, President Nicolás Avellaneda had to face the first major economic crisis of the modern state during his Government.

In 1867, the Banco de la Provincia de Buenos Aires created the Exchange Office, through which Argentina entered the currency convertibility regime. Until 1873, this Office successfully increased its gold reserves, due to the strong inflow of loans contracted by the national and some provincial governments in the London market as a result of the War of the Triple Alliance.

At the end of the XIX century, numerous additional loans were contracted, especially during the presidency of Bartolomé Miter and the first of Argentine Julio Roca. They were all with British banking, the same country that was the main trading partner in the country and the biggest investor, being the railways, the most important banks and British-owned transport.

This feverish inflow of foreign capital, together with an accelerated increase in commercial activity, as well as imports and the appearance of speculation in land whose price rose to the beat of commercial exchange. The incidence of imports was reflected in a trade balance deficit.

However, as long as Argentina received capital from abroad, this deficit situation would not translate into a deficit in the balance of payments. The problem of the trade imbalance became visible when the inflow of capital ceased, partly as a result of the European depression of 1873, which cut off investment flows. From that moment on, the deficit situation of the balance of trade and the balance of payments caused a significant decrease in the monetary base of cash. The problem could not be solved with an increase in exports, so the government of the recently inaugurated President Nicolás Avellaneda had to resort to a clearly deflationary policy, suspending the contracting of new loans abroad, decreeing the non-conversion of bank notes of the Province and of the National, and even decreasing salaries of employees and reducing administrative personnel. The retraction of bank credit during 1875 and 1876 hit rural production hard. This series of measures plus the Customs Act of 1876 influenced the rapid decline in imports. Although exports maintained their previous level, the drop in imports, particularly sharp in the years 1875 and 1876, caused a reversal in the predominant trend of the trade balance, which went from being in deficit to being in surplus.

President Avellaneda, in his opening message to Congress in 1875, described the country's economic situation in the following terms:

Large amounts of money have flown in recent years to the Plaza de Buenos Aires, having mainly its origin in the loans that the Nation and this province contracted in London. Hence, their accumulation in banks, low interest and facilities as seductive as unknown to the credit. The country was not in a position to improvise such considerable capitals to reproductive work, and speculations on sterile land, which artificially increased its price from one transaction to the other, overexpenditures and the accumulation of imported goods, further exaggerated by the competition in these cases. With the inevitable time of reimbursements, the crisis has survived, which has already begun to find its main remedy in the reduction of private and public expenditures.

President Nicolás Avellaneda

In 1884, debt service payments reached 28 million gold pesos. By the end of Roca's term, Argentina raised its external debts to 38 million pounds sterling.

The crisis of 1890

The Government of Juárez Celman was characterized by an inverting ferment that soon after led to a financial collapse.

Starting in 1886, during the government of Miguel Juárez Celman, there was a fever of British investment in railways. Concessions are granted to almost all the proposed layouts, regardless of their true productive potential, which in turn led to an increase in land values. This type of investment, which lent itself to numerous speculative maneuvers, would end up leading to what was called the crisis of 1890. Added to this speculative fever was the incompetence, embezzlement and speculation of the authorities and economic agents of the conservative government of Juárez Celman., who were dazzled by an extremely favorable situation in the capital market.

Although Juárez Celman is blamed locally for the crisis, it also had a main external player, the Baring Brothers house, which recklessly tried to monopolize concessions in Argentina and launched investment projects too quickly, without ensuring their capital investments, exceeding their business capacity.

The growth of debt, both public and private, translated into an excessive monetary expansion that led to a strong depreciation of paper money, threatening the profitability of investors, and paralyzing the entry of new capital. British investors, disturbed by reports from Buenos Aires about financial abuses, became increasingly cautious towards Argentine projects and turned their attention to other markets.

At the beginning of 1889, symptoms of the Argentine government's lack of solvency to pay the debt contracted with European banks began to appear. The prospects of a poor harvest worried stock market speculators and the price of gold began to rise. In February, the Government tried unsuccessfully to prohibit the sale of gold on the Stock Market and, in September, investors had already lost their confidence in the Argentine Government. The catastrophe did not happen immediately, thanks to the intermediation of Baring Brothers between individual investors and the Argentine authorities.

The European bankers proposed to the government of Juárez Celman a remedy that did not favor the government: debt consolidation, suspension of new loans for ten years, suspension of the issuance of paper money, and a drastic reduction in public spending. The Government of Juárez Celman could not accept the proposal, since this austerity policy would have destroyed their political support.

Along with the economic crisis, popular discontent grew, encouraged by the opposition force to the government of Juárez Celman, the Civic Union. On April 12, 1890, the cabinet resigned, and on the 16th Juárez Celman appointed a new one, in which two men from the Civic Union joined in key areas: Roque Sáenz Peña in Foreign Relations and Francisco Uriburu in Finance, succeeded by Juan Agustín. Garcia. The liberal policies of the Government of President Miguel Juárez Celman (1886-1890) led to a period of financial speculation that created a bubble, a fact reflected in the creation of a large number of banks based in Buenos Aires during those years. With the outbreak of the crisis, the Argentine State entered into cessation of payments and declared bankruptcy, from which it would emerge only four years later.

Finally, the government of Juárez Celman fell after the Parque Revolution of July 26, 1890. His successor, then Vice President Carlos Pellegrini, reopened negotiations with European banks to solve the crisis. Pellegrini's first triumph was the arrangement between the Argentine emissary, Victorino de la Plaza, and the president of the International Commission of Bankers, Lord Rothschild, in March 1891.

After the collapse of the speculative bubble and the system of guaranteed banks, Carlos Pellegrini created the Currency Board in order to manage the issuance of currency and precious metal reserves.

Important measures were also adopted, such as the liquidation of the National Bank, the dismissal of 1,500 postal employees. New resources were created ― the payment of 50% of customs duties in gold, the return of taxes on exports abolished in 1887. The sectors that suffered the most from the effects of the crisis were the Government itself, whose financial problems placed it in an uncomfortable situation, and the non-exporting urban sector (merchants, importers, workers and those who speculated with land and securities).

From 1892 to 1900

Carlos Pellegrini was the president who piloted the exit of the crisis of 1890 and years later was the driving force behind a project to unify the Argentine public debt, an initiative that finally did not thrive.

A new loan was taken in London in 1871 for the equivalent of twenty million strong pesos, which at the same time were poorly lent through Banco Provincia. In 1896, the external debt amounted to 922,545,000 gold pesos and the interests that had to be remitted abroad consumed close to 20% of the State coffers in 1881; 49% in 1888 and 66% in 1889. To the constant fiscal and commercial deficit incurred by the generation of '80, we had to add the expenses of the oversized Argentine bureaucracy. In 1902, the official bureaucracy cost Argentina 6 gold pesos per capita, against the 1.20 pesos it cost in Switzerland, 1.0 in the United States or 2.06 in England. In the midst of the 1892 crisis there were 7,653 public employees, the following year there were 8,860, and more than half worked in the Federal Capital.

In 1890, Argentina was on the brink of default. The debt service burden represented close to 50% of tax revenue. Carlos Pellegrini decided that the country should "honor its debts" to keep foreign markets open. The restructuring was negotiated with the head of the English Banking Committee, Lord Rothschild.

President Luis Sáenz Peña, who took office in 1892, continued the negotiation with the creditor banks started by his predecessor Carlos Pellegrini and undertook to pay an annual sum of 1,565,000 pounds to the Bank of England.

In January 1896, the National Congress authorized a bond issue of 50 million gold pesos at 4% interest with amortization of 0.5%, with the aim of paying all outstanding accounts derived from the guarantees and rescinding all railway guarantee contracts possible through negotiation. As a result of these efforts by the Argentine government, five companies accepted large sums in lieu of state guarantees and two were bought, thus reducing possible demands for railway guarantees by 50%. After 1905 no guarantee or subsidy of any kind was granted to the railway companies.

Although by the first years of the 1890s the crisis had already been resolved, foreign investments did not recover the same rhythm that they had during the previous decade. The crisis had hit Baring Brothers so badly that British investment in Argentina did not recover until 1904. Loans to the Government declined sharply, so investment in railways, meatpacking, land companies and banks grew slowly.. However, this did not affect the agricultural and livestock sector, which experienced an increase in the values and volumes of its exports in those years.

In 1898, General Julio A. Roca assumes his second term as president of the Nation, while his political colleague Carlos Pellegrini, assumes as national senator. Roca asked Pellegrini to prepare a legislative initiative for the consolidation of the public debt of 392 million gold pesos, in a single loan for 453 million gold pesos. Pellegrini drew up a project for the unification of the external public debt, through a single loan at 4% annual interest and 0.5% long-term amortization and with obligations guaranteed by customs revenues. The proposal obtained the approval of the Senate, but after many newspaper articles and public demonstrations criticizing the measure, Roca decided not to support it in the Chamber of Deputies, an action that irritated Pellegrini, to such an extent that it caused a rift between the two in 1901. Roca, for his part, argues that the environment created in the streets and in the press is not appropriate to instill confidence among investors.

20th century

Turn of the century

During the period 1904-1916, which included the presidencies of Manuel Quintana, José Figueroa Alcorta, Roque Sáenz Peña and Victorino de La Plaza, external indebtedness continued through British banks.

Then the presidency of Hipólito Yrigoyen followed, where the external debt increased mainly to finance the growing fiscal deficit, generated by the policy of hiring thousands of public employees. The problems worsen in 1914 due to bad harvests and the sharp decrease in international export prices. The withdrawal of European capital due to financial straits precipitated the crisis. Already in 1916 the Argentine debt had risen to 121 million pounds. The decision of the Bank of England to increase the interest rate caused the reversal of the flow of foreign capital towards Argentina and prevented it from financing the deficit in its balance of payments. The imbalance in the balance of payments deepened as a result of the meager harvest of 1913-1914. Thereafter, the Argentine economy slid into a deep recession. The transmission mechanisms of the crisis were two: the outflow of gold abroad and the fall in primary exports. Within the framework of the gold standard, this flight caused a severe reduction in currency, an increase in the interest rate and a succession of bankruptcies of companies and businesses. The unemployment rate shows a notable increase, doubling in just one year, since which reached 13.7% in 1914, with 321,090 unemployed compared to 2,009,671 employed persons. In 1915 it reached 14.5%, in 1916 it reached 17.7% and in 1917 it reached 19.4%, with a total of 445,870 unemployed compared to 1,887,981 employed people.

The drop in imports and economic activity increased the fiscal deficit to unprecedented levels since the time of Juárez Celman, since the state's finances depended largely on customs revenue. Between 1913 and 1917, the GDP increased contracted 20%. The drop in GDP per capita was even more important, since it fell by 34% in the same period. This deep and prolonged recession exceeded even that produced during the Great Depression, when GDP per capita contracted 20% between 1929 and 1932. Foreign investment disappeared during World War I to finance the European war, and did not return after World War I. peace.

With the presidency of Marcelo T. de Alvear, the foreign debt and British influence in economic policies once again increased significantly.

From 1929 to 1938 the de facto governments of José F. Uriburu and Agustín P. Justo succeeded each other in which the debt continued to increase.

World War II (1938-1945)

The growing production generated by the Second World War in Argentina creates the need for a financial entity that mobilizes funds for the promotion of the industry. For them, the Industrial Development Bank was created in 1944. Quickly, during the Government of Pedro Pablo Ramírez, the entity became the main provider of bank credit to growing industrial companies, reducing the request for loans abroad and achieving financial surpluses used to curb the increase in external debt.

Governments of Juan Domingo Perón (1946-1955)

Juan Domingo Perón in 1973. During its management (1946-1955), Argentina became a debtor country (12 500 million pesos) to a creditor country (5 billion pesos).

The issue of foreign debt accompanied every address by Juan Domingo Perón as president since 1946 and was one of the central points of the Act of Economic Independence enshrined in Tucumán on July 9, 1947 ―as the Act of Independence, on July 9, 1816, also in Tucumán―. The total redemption of Argentina's foreign debt was achieved in 1952. The Peronist government then highlighted that the debtor country of 12,500 million pesos (national currency pesos) became a creditor for more than 5,000 million million dollars.

The period 1947-1951 indicates a downward trend in interest rates ―in line with economic stability― and a marked decrease in the external debt that is paid off completely in 1952, with the payment of more than $m n 12,000 million belonging to the last two semi-annual installments of the Argentine-British loan contained in the Roca-Runciman agreement (1933). Since the stage before the 1824 agreement with the Baring Brothers house, a similar situation had not occurred in history Argentina, which would place the country as a creditor, displacing it from its debtor position.

The great existence of foreign currency in the country at the end of the Second World War in 1945 and the surplus of the trade balance between 1946-1948 were applied to the repatriation of the foreign debt. Likewise, the internal debt will decrease by 17.8% between the years 1945-1952.

In 1949, the Organic Charter of the Central Bank was reformed and the increasingly accelerated growth of the national domestic market. In this context, the Foreign Investment Law (of 1953) and the agreements signed with California Standard Oil revealed a shift in the Government regarding the usefulness of international capital.

In 1951, in the midst of Peronism, Argentina went from having a debt of 12,500 million m$n (pesos national currency) to be for the first time in its history a creditor country, for more than 5,000 million m$n.

Liberating Revolution (1955-1958)

After the overthrow of Perón in the 1955 coup, the dictatorial government led by General Pedro Eugenio Aramburu, acquired a new foreign loan. Thus, a loan of 700 million dollars was contracted with several European banks, which was supposed to be repaid over the course of a year.

The change in foreign policy towards an alignment with the United States was combined with the incorporation of Argentina into the International Monetary Fund (IMF) and the World Bank in 1956, at the same time that bank deposits were denationalized. Argentina enters by force in the circle of indebtedness and inflation with new credits to pay the interest of previous loans. That same year it became clear that it was impossible for the military government to repay the loan. Faced with this situation, the French Finance Minister invited Argentina's 11 creditor countries to meet in Paris. From this meeting emerged the Paris Club, an informal forum of official creditors and debtor countries. The self-styled "Liberating" Revolution joined the IMF in 1956.

In 1958, at the end of the dictatorship that called itself the "Liberating" Revolution, Argentina ceased to be a creditor country to become a debtor, exceeding one billion dollars in debt. While at the end of World War II, the reserves of gold and foreign currency accumulated in the Central Bank exceeded the foreign debt by 1.3 billion dollars, at the end of April 1958 it was the foreign debt that exceeded the reserves of gold and foreign currency by 1.1 billion dollars.

Governments of Frondizi, Guido and Illia (1958-1966)

In the 1958 elections, the intransigent radical, Arturo Frondizi, was elected with the strong support of Peronism, which was outlawed. According to the presidential diagnosis, the economic condition inherited after three years of the military regime of the "Liberating" Revolution was dramatic, the main problem being excess spending over national production, which had led to both trade deficits and a low level of investment.

When it fell in March 1962, the external debt can be estimated at 1.8 billion dollars; bordering on 2,100 million at the end of the de facto government of José María Guido, in July 1963.

First agreement with the IMF

The first agreement with the International Monetary Fund (IMF) was signed in 1958, during the presidency of Arturo Frondizi. It was a loan for 75 million dollars destined to "stabilize the exchange problem" and "stop inflation". In the party, within the Government and in public opinion, there was resistance to applying measures that ran counter to the ideals "developmentalists" and the promises of the electoral campaign. Certain unexpected measures, such as the launch of the "oil battle", had unleashed an angry worker and social protest in which ideological and procedural questions were intertwined that weakened the government's position vis-à-vis investors and the Armed Forces.

The pact with the IMF signed by Donato del Carril at the request of Frondizi had secret clauses that implied a structural adjustment, such as a 15% reduction in public jobs (with the dismissal of workers), the total stoppage of public works, the privatization of state companies, the reduction and sale of state refrigerators, the massive closure of railway branches (within the framework of the Larkin Plan), restrictions on the granting of credits, price increases and the freezing of the minimum wage for two years, among other measures. Shortly after, the sale of 40 state companies was completed, a process that began during the dictatorship of Pedro Eugenio Aramburu.

Two IMF missions were in Argentina in August and November 1958. The first evaluations were very pessimistic for two reasons: on the one hand, the Frondizi government was politically weak. On the other hand, for IMF observers, in Argentine society there was no consensus favorable to the profound reforms that should be carried out. Even so, by mid-December the outlines of the plan and the usual "Letter of Intent" officially requesting help from the IMF, were already ready.

Alsogaray and President Arturo FrondiziLeft), who appointed Economy Minister under military pressure, 1959.

To access the requested assistance, Argentina had to modify its economic policy and obtain the convertibility into dollars of its favorable trade balances with the European creditor countries grouped in the Paris Club. At the request of the IMF, Finance Minister Álvaro Alsogaray announces a plan to adjust public spending that includes an increase in fares and a reduction in rail transport, among other measures. With this agreement and after the approval of the economic program by the IMF, international financial organizations, a consortium of private US banks and the US Government granted 329 million dollars to support the Economic Stabilization Plan with which a new stage in the economic policy of the Frondizi government.

In this context, Alsogaray had to resign in April 1961, while Frondizi would be removed from office by a military coup in March 1962. At the end of Frondizi's presidency the debt reached 1.2 billion dollars.

The presidency was left to José María Guido, who followed him in the line of succession. Guido reappointed Alsogaray as head of the Ministry of Economy, who signed a new "stand by" with the International Monetary Fund (IMF), which imposed the reduction of import duties to zero, the increase in taxes on consumption and the rates of public services. Withholdings on traditional exports were reduced and spending and public investment were reduced. The dollar reached $138 its highest value in history until then. The decrease in economic activity contracted the tax base, so the state deficit did not decrease but increased. It was not possible to pay the bills or the salaries of the public sector, which the Minister of Economy determined to pay with titles of the "forced patriotic loan". In mid-December, a mission sent to explain to European creditors the imminent stabilization plan reaffirmed Argentina's intention to continue paying its foreign debt under the same terms that had been agreed upon in 1957 and ensuring the new exchange regime and Argentine trade (adopted at the request of the IMF and the Government of the United States).

That same year, various debt maturities and a capital flight caused a reduction in reserves that had a significant impact on the country's credit. To alleviate the situation, the government had to resort to a loan from the Central Bank, exceeding the limit agreed with the IMF in order to finance its current expenses. For this reason, the Fund declared Argentina in violation of the signed agreements.

Guido hands over power to Arturo Illia who reduces the debt from 2 billion dollars to 1700 million.

From 1966 to 1983

During the military period between Juan Carlos Onganía and Alejandro Agustín Lanusse (1966-1972), Argentina's external debt increased from 3,276 million dollars to 4,800 million dollars, 46%. Minister Krieger Vasena ordered that the floating commercial debt of 700 million dollars existing at that time, be converted into financial debt.

In October 1975, Guido Di Tella, the Secretary of Programming and Economic Coordination of the Government of Isabel Perón, sent a letter to the IMF requesting financial support in the midst of the oil crisis. This loan was finally approved in December of the same year. Between the governments of Héctor José Cámpora, Juan Domingo Perón and María Estela Martínez de Perón (1973-1976), the debt rose from 4.87 billion dollars to 7.8 billion dollars, a 62 %, giving the equivalent of 320 dollars of debt for each Argentine (per capita).

Civic-military dictatorship

Between 1976 and 1977, the IMF had requested a series of measures, among which were that the Nation could only borrow with the endorsement of the president of the Central Bank, Adolfo Diz (former director of the IMF), and José Martínez de Hoz (Economy Minister). In addition, the elimination of import tariffs, the reorganization of the financial system, the unification of the currency and the release of capital movement controls were requested. With the excuse of accumulating foreign currency, Diz and Martínez de Hoz produced an uncontrolled indebtedness and in 1978 inflation was declared. The cheap dollar, together with the lowering of tariffs, produced an increase in imports that affected the national industry and the banking crash of the eighties was the result of the same cheap dollar, with the free financial system and a state guarantee of deposits. that unleashed speculation and various financial frauds.

During the last civil-military dictatorship (1976-1983), the debt climbed to 45,000 million dollars, 364%, with which it came to have a per capita debt of 1,500 dollars. That period was characterized by its high liquidity index and low interest rates for international loans, which led to the arrival of significant capital flows throughout Latin America. The economic policy during this period was marked by the opening of the national market to foreign capital, the reduction of the protectionism that had prevailed in the previous decades and a liberalization of the banking sector. In addition, an exchange "table" was established that defined the value of the peso during the following eight months.

José Martínez de Hoz, Minister of Economy of the Nation (1976-1981).

This combination of measures allowed the emergence of the popularly known “financial bicycle”, which consisted of taking advantage of the differential that existed between local and international interest rates, a factor generated by the delay in exchange parity. In this way, the business was based on requesting credits abroad, changing the currencies entered at the current exchange rate (overvalued), placing that money in the local financial market (fixed terms at high interest rates) and finally reconverting those pesos again. in foreign currency, which yielded large profits. Unlike other countries in the region, which allocated part of the external debt to deepen their industrialization processes, in Argentina international credit was used mainly for speculative purposes.

By 1980 the failure of Martínez de Hoz's economic policy was already evident, to which was added a rise in international interest rates. The banking crisis broke out in March when the Government decided to close the Banco de Intercambio Regional, which at that time was the largest of the local private banks. Within a few days, other large banks were ordered to close and the liquidation policy continued throughout the year. This caused a general panic among investors, which resulted in a withdrawal of bank deposits and a speculative demand for currencies. In 1981, the currency finally had to be significantly devalued, which put local economic groups and transnational companies that were heavily indebted in dollars on the brink of bankruptcy. In the midst of a deep economic crisis and a bank run, the de facto president Jorge Rafael Videla and his minister José Alfredo Martínez de Hoz resign, Viola taking over. On March 29, 1981, Lorenzo Sigaut took office, who ordered a new devaluation that caused the Peso to lose 35% of its value against the dollar, while the GDP fell 6% year-on-year. After these initial measures, the exchange market was divided into financial and commercial, while prices increased by 155%, the result of these measures was to deepen the recession with high inflation.

Faced with this situation, the then president of the Central Bank, Domingo Cavallo, resolved to implement exchange insurance to allow local private debtors to repay their foreign debts. Although said insurance included an interest rate, the reality was that inflation and the subsequent devaluations ended up liquefying those debts, which, in fact, translated into a nationalization of the private external debt. This fact added to the State commitments for more than 5 billion dollars. Some of the companies that benefited were (in order starting with the one that added the most debts): Acindar, Alpargatas, Autopistas Urbanas, Banco de Italia, Celulosa, COGASCO and Pérez Companc, among others.

The new president of the BCRA, Julio González del Solar, who succeeded Cavallo, determined on November 17, 1982 through BCRA circular A251 the direct nationalization of some 17,000 million dollars of private external debt that became public debt. The debt of different companies such as Alpargatas S.A., Grupo Macri, Banco Francés del Río de la Plata, Banco de Galicia, Bunge y Born S.A., Grafa S.A., Molinos Río de la Plata, Loma Negra S.A, Ledesma, Pérez Companc S.A., ACINDAR S.A., Ingenio Ledesma, was transferred to the State, thus releasing the debtor companies. Cavallo denounced at that time that the nationalization of the private external debt had been the result of pressure from companies that had borrowed in dollars.

Raúl Alfonsín and the return of democracy (1983-1989)

In December 1983, democracy returned to the country with the inauguration of Raúl Alfonsín. The external debt had increased by 364% during the military government to reach 45,000 million dollars, for which its payment demanded 50% of the foreign currency generated by the country's exports. Alfonsín stated:

"It is imperative that we understand that the payment of the debt has to be linked to our exports and, on the other hand, we are convinced that a long-term refinancing is needed and with the corresponding grace years. Argentina wants to pay, is willing to pay, wants to fulfil its obligations, but everyone should also warn that there is some sort of competing guilt here. "

Raúl Alfonsín

In 1984 the government declared a unilateral debt moratorium for 180 days while trying to initiate a renegotiation. In May of that year, Alfonsín together with the presidents Joao Figueiredo (Brazil), Belisario Betancourt (Colombia) and Miguel de la Madrid (Mexico), made a statement about the impossibility of complying with the payments of the foreign debt due to the rise in the international interest rate and the protectionism of the central countries. In August it was announced that an agreement had been reached with the IMF, which was finally signed in December of that year.

The weight of the external debt and the macroeconomic imbalance were overwhelming, the public deficit was constant becoming a serious problem: 10.5% in 1984 and 7.7% the following year. The reduction of the deficit was achieved based on reducing public investment, delaying state salaries and postponing payment to suppliers, aspects that had an unfavorable impact on the rest of the economy. In June 1985, the government launched the Plan Austral, a heterodox stabilization program that worked during the first months but quickly lost its effectiveness.

In February 1986, the government announced suspension of payments to Paris Club creditors. At that time, the debt with these countries amounted to 6 billion dollars. In February 1987, Argentina reached a stand by agreement with the IMF. In addition to the Fund, two other compensatory agreements for the drop in exports (1987 and 1988) were added. In April 1988, Argentina entered into a moratorium on the payment of its foreign debt.

In 1989 hyperinflation broke out. During that year, public spending represented 35.6% of GDP and the fiscal deficit amounted to 7.6% of GDP. From December to December inflation reached 3079%.

During Alfonsín's government, the debt reached 58,700 million dollars, rising 44%.

Governments of Carlos Menem (1989-1999)

The deep recession that the country went through during the eighties practically inhibited any possibility of meeting the payments. Thus it was that in 1988 it was resolved to suspend all types of refunds, which caused arrears of some 6,000 million dollars to accumulate.

In April 1990, debt payments were reestablished, albeit partially, at a rate of 40 million dollars per month, a figure that increased slightly from 1991. When Domingo Cavallo took office as Economy Minister in January 1990, that year, the debt was already 61.4 billion dollars. The full reestablishment of payments only materialized in 1993, after the implementation of the aforementioned Brady Plan, as a definitive solution to the debt problem.

Regarding the evolution of the debt, Domingo Cavallo stated:

As the external gross public debt is expected to stabilize around $46 billion, to begin to decline by 1997, it is possible to project a gross debt/BDP ratio of 15.4 per cent by 2000. By the end of the century, public debt will be insignificant

Domingo Cavallo, 1993

However, the following years saw an increase in indebtedness. In the decade of the government of Carlos Saúl Menem, the external debt rose by 123%, with 146,219 million dollars.

The Brady Plan

Increased debt

As of December 31, 1995, the national State debt was 87,091 million and by the time Domingo Cavallo was replaced by Roque Fernández, in July 1996, it had already risen to 90,472 million. Not even the 23,948 million dollars (11,441 million in cash and 12,508 million in redemption of public securities) collected by the Government during those years through privatizations had managed to reverse the growth of the debt.

The issue of the current account was of vital importance to sustain Convertibility, since as long as there was a surplus or at least a balance in the accounts, the system would be self-sustaining. The strong demand for foreign currency for imports caused by the exchange rate lag and the opening of the economy had initially been offset thanks to a strong repatriation of capital and the privatization process. However, in the middle of the decade a new flight of local deposits abroad began and after several years of heavy investment, international conglomerates began to send profits and dividends to their parent companies. In addition, many companies had taken advantage of the favorable international context to borrow, either by issuing negotiable obligations (ON) abroad or through direct bank loans, all these factors caused greater pressure on the balance of payments, which turned into deficit. To cover this gap, the only option for the public sector was to borrow in foreign currency, therefore, the external imbalance of the private sector had to be compensated by the State itself, which in turn led to a growth in the interest burden within the public spending.

Argentinian debt 1994-2004. Expressed in billions of dollars, and blue for external debt.

By looking at the statistics, it can be deduced that the expenditure allocated to the operation of the State has always remained relatively stable (between 1993 and 2001 it went from 6.2% to 6.4% of GDP), while public social spending grew very slightly, from 20.3% in 1993 to 21.8% in 2001. In contrast, the interest that the State had to pay for its debts had grown significantly from 1.8% to 5.3% of GDP between 1993 and 2001. Therefore, the origin of the deficit lay in the debt interest burden, which had risen considerably, although Minister Cavallo preferred to make adjustments on the side of state operating expenses and social services.

21st century

De la Rúa and the convertibility crisis (1999-2001)

Argentina was going through a serious economic crisis, 2/3 of the contracts between individuals (in the country) were made in dollars and there was not a sufficient reserve of dollars to deliver. Argentine society did not want to abandon the convertibility of the peso and the Menem government had borrowed to maintain economic parity. The foreign debt reached US$ 146,000,000,000 in November 1999 and the country had a population of about 36 million, of which 32% It was below the poverty line and to this was added 16% unemployment.

Fernando de la Rúa opted to maintain convertibility and promote a sharp reduction in primary public spending and applied various measures to promote exports and protect the national industry. The Minister of Economy, José Luis Machinea, decided to immediately face a fiscal adjustment program endorsed by the IMF. His successors in office, Ricardo López Muphy and Domingo Cavallo, continued the measures to reduce public spending, increase taxes and increase indebtedness.

Financial shielding

President Fernando de la Rúa must have faced a highly unfavourable economic context for the Argentine economy.

Mega Swap

De la Rúa's government ended in December 2001 in the midst of a political, social and economic crisis that led to the devaluation of the currency the following year. At the end of his government, the external debt amounted to 144 billion dollars.

Transitional government: default and devaluation (2002)

Adolfo Rodríguez Saá, president of the Nation during the last week of 2001. During its brief management, the default of external debt.

The Legislative Assembly convened by Senator Ramón Puerta (in the exercise of the national presidency) elected the then governor of San Luis, Adolfo Rodríguez Saá, as president of the Nation, for a transitory period of 90 days, after which the to presidential elections.

Rodríguez Saá assumed the presidency on Sunday, December 23, 2001. The following day Argentina had to face two debt maturities: one of 13 million dollars with the International Monetary Fund (IMF) and another for 4.3 million dollars in Eurobonds. After being sworn in, Rodríguez Saá gave an enthusiastic speech:

"We will take the bull for the asses (...) first, announcement that the Argentine State will suspend the payment of the external debt"

However, that same night the already president Rodríguez Saá clarified: «This does not mean the repudiation of the foreign debt nor a fundamentalist attitude. Quite the contrary, it is the first act of the Government, which has a rational character to give the issue of foreign debt the correct treatment." The decision aroused conflicting opinions. The liberal economist and former official of the dictatorship Manuel Solanet declared himself against, indicating that he considered it "regrettable" that default is considered "a positive act". Meanwhile, Martín Redrado of the Capital Foundation spoke in favor, clarifying that "Argentina could not pay the debt".

Beyond the maturities of December 24, the country had to face another payment on the 28th for 504.2 million dollars, in letes (treasury bills). In addition to commitments that were due in January 2002, for a total of 553 million dollars, of which 136 million corresponded to principal payments and 417 million to debt interest.

The public debt then amounted to 132,143 million dollars and public securities represented 72.2% of the total. At the time the default was declared, the country's main creditors were Argentine bondholders, who had acquired them mainly through the retirement and pension funds managed by the AFJP. These papers were distributed throughout a large part of the world, in possession of small, medium and large private savers. Most of the securities were issued in dollars (72%) and euros (18%), although there were also papers in Argentine pesos, British pounds, Swiss francs, Japanese yen and more exotic currencies such as Danish and Swedish kroner, the Canadian dollar and Kuwaiti dinar.

Former minister Domingo Cavallo declared:

All the journalistic chronicle and the opinions expressed during those days by the journalist Marcelo Bonelli, who from a long time ago reflected the thought of the main leaders of the Argentine Industrial Union, ended up convincing me that what was happening was an institutional break for subverting the entire economic organization of the country, which was not limited to the cessation of payments announced by Dr. Rodriguez Saa.

Domingo Cavallo

Eduardo Duhalde, president of the Nation during 2002.

Without party support and besieged by protests,^{[citation needed]} Rodríguez Saá resigned on December 30, 2001, just a week after taking office. The Legislative Assembly appointed Eduardo Duhalde as interim president, who took office on January 2, 2002. The central measure of the Government of Eduardo Duhalde would be the exit from the convertibility plan, which had been in force since 1991 and which had maintained one-to-one parity between the peso and the dollar.

Regarding the public debt, Eduardo Duhalde maintained the decision of his predecessor Adolfo Rodríguez Saá to temporarily suspend interest and principal payments. Only 3.5 billion in interest on the debt held by local creditors would be paid, in line with what had been agreed in the last bond swap, which included a two-year grace period. Instead, foreign creditors would be offered a renegotiation on more favorable terms for Argentina, with the commitment to start paying later, once the economy began to grow. Shortly after, by Decree 471/2002 of Necessity and Urgency of March 13, 2002, the national, provincial and municipal public debt governed by Argentine law was also "pesified" at $1.40 for each dollar. Duhalde ―who on the eve of the presidential inauguration had expressed his fear of a "civil war" in Argentina― began by acknowledging that the country was "broken" and "fused," and announced a government of national unity with the triple mission of "reconstructing political and institutional authority, guaranteeing social peace and laying the foundations for changing the economic and social model" 3. 4;

Meanwhile, the new government unsuccessfully sought to reach a new agreement with the IMF to obtain economic aid and political support to renegotiate the foreign debt. The growth of the external debt was due to the “asymmetric pesification”. Eduardo Duhalde announced the pesification of bank deposits in dollars at a value of 1.40 for each dollar, instead, the loans and credits granted had an exchange rate of 1 to 1. This was what increased the external debt by about $47 billion.

Governments of Néstor Kirchner and Cristina Fernández de Kirchner

Néstor Kirchner (2003-2007) and Cristina Fernández de Kirchner (2007-2015), presidents of the Argentine Nation. In the photo are accompanied by their children, Florence and Maximum.

During the governments of Néstor Kirchner (2003-2007) and Cristina Fernández de Kirchner (2007-2015), two debt swaps were carried out, in 2005 and 2010, and the entire debt that the country had with the IMF. External debt in absolute terms went from US$178 billion in 2003 to US$250 billion in 2014. However, economists agree that deleveraging should be measured as debt / GDP. Using this criterion, and according to data from the IMF, between 2003 and 2013 Argentina experienced a 73% reduction in its external debt with respect to the Gross Domestic Product and turned out to be the country with the highest level of deleveraging in the world.

On August 3, 2012, the national government paid the 2,197 million dollars corresponding to the last interest installment of the BODEN 2012, which had been issued in 2002 to compensate savers for deposits confiscated during the financial corralito. In this way, the "corralito" imposed after the 2001 crisis was ended.

In 2014, Argentina's external debt increased by 4.5% due to the issuance made to pay compensation for the nationalization of YPF. In the first quarter of 2015, Argentina's external debt increased by 5.9% % compared to the same period of the previous year. (If the private sector debt is added to the public sector debt, it would reach US$145,931 million).

An important aspect of the debt policy of the Kirchner governments was the change in the composition of the debt, favoring securities in pesos financed by public organizations (the Central Bank, Ansés and Banco Nación). For 2011 52.2% of the debt was in the hands of these public creditors, while 10.4% belonged to international organizations such as the World Bank, 3.4% to the Paris Club, and the remaining 33.4% to the private sector. Public debt in the hands of private sector creditors and multilateral credit organizations was equivalent to 18.8% of GDP, while the rest was intra-public sector debt.

In 2015 Argentina had 251,000 million dollars in foreign assets, of which 46,000 million were international reserves, representing a net creditor position of 52,000 million (+11% of GDP). Since From the beginning to the end of that year, the debt increased by 18.3 billion dollars. of the lowest levels in the world.

Debt restructuring and swaps

During 2003, the Government of Néstor Kirchner managed to negotiate a rescheduling of obligations with multilateral financial organizations (International Monetary Fund, World Bank, Inter-American Development Bank and other minors) in what was called the Argentine debt swap. At the end of 2004, the total external debt reached 178 billion dollars. However, $81.8 billion worth of securities were still in default in the hands of private creditors.

By October 2012, more than 270,000 million dollars had already been paid, the debt had fallen to 141,803 million. In 2013, it still has between 8,000 and 10,000 million dollars of bonds in default, reducing the weight of external debt from 153.6% to 34.7% of GDP. In the first quarter of 2013, the debt fell by 2,159 million dollars, down to 139,137 million dollars.

First Exchange (2005)

Néstor Kirchner (President of the Republic) and Roberto Lavagna (Minister of Economics).

On September 22, 2003, President Néstor Kirchner proposed an average write-off of 75% of the value of the debt owed to Argentine bondholders, which amounted to 94,302 million dollars. According to the proposal presented by Roberto Lavagna (Minister of Economy) and Guillermo Nielsen (Secretary of Finance), private creditors could choose between three bonds:

• the Par bonus (with greater deadlines and without reduction or with a small reduction in its capital value);
• bond C (which would require funding); and
• the Discount bonus (with a reduction of the nominal value).

The new securities could be consolidated in dollars, euros, yen or indexed pesos. The restructuring plan did not include the debt issued after the default, including the different types of BODEN. These bonds had been delivered to retirees, state workers and savers who had accepted these bonds in exchange for the deposits that were retained by the bank "corralito".

However, this initial proposal was rejected by local bondholders.

On June 1, 2004, the Government announced the "Buenos Aires Proposal" to restructure debt payments. On January 14, 2005, the debt swap operation was officially launched in default. In exchange for the defaulted securities, the Argentine government offered three new bonds:

• the Par bond (which did not imply removal of the original capital owed) would pay an initial interest of 1.33 % that would gradually rise to 5.25 % to the 25 years of its issue, and would have a deadline of 33 years (year 2038);
• the Cuasi Par bonus (which included a 30.1 % reduction in the capital) would pay an interest of 3.31 % plus a coefficient linked to the consumer price index and would have a 30-year period; and
• The Discount bonus (which would involve a 66.3 % removal) would pay the greatest interest, 8.28 %, and would have a 28-year period (with maturity in the year 2033).

Bonds also offered additional compensation, tied to growth in gross domestic product. The deadline for receiving expressions of interest ended on February 25, 2005; The level of acceptance reached allowed the renegotiation of approximately 76.15% of the amount owed. Debts equivalent to $62.5 billion face value were restructured, exchanged for new notes with a face value equivalent to $35.3 billion ($15.0 billion Par, $11.9 billion Discount, and $24.3 billion million Argentine pesos in Quasi Par titles); In addition, as a result of the restructuring, the peso component of the debt went from 3 to 37%.

The main creditors of the titles in default were Argentines, with 38.4% of the total. Then came the Italians with 15.6%, the Swiss with 10.3% and the Americans with 9.1%. Due to the amount and number of securities involved (152 different bonds originally issued in dollars, euros, yen, Swiss francs, British pounds and Argentine pesos), this was considered the most important operation in world financial history.

On February 9, 2005, Congress enacted Law 26,017 or “Cerrojo Law”, prohibiting the Executive Power from reopening the exchange process, which implied that the offer could not be modified or improved and from carrying out any judicial transaction, extrajudicial or private with respect to the bonds subject to the exchange.

Reopening of the swap (2010)

In September 2008, President Cristina Fernández de Kirchner announced a meeting in New York with the Council on Foreign Relations, after which she reported that together with three banks they were studying the possibility of resolving the debt with creditors who had not entered in the 2005 swap.

On August 3, 2009, the Government paid the 2012 Boden for 2,251 million dollars

The then Minister of Economy, Amado Boudou said: "With new measures that will be taken in the coming months, Argentina would be in a position to return to the international credit markets towards the end of the year."

President Cristina Fernández de Kirchner together with Amado Boudou, then head of the Ansés (National Social Security Administration), then Minister of Economy and Vice President of the Nation.

In October 2009, the Minister of Economy Amado Boudou announced the reopening of the swap of 20,000 million dollars of debt for the holdouts, which are those that did not accept the restructuring proposal in 2005. On April 15, 2010, Minister Amado Boudou launched the new debt swap. With a discount of 66.3% to institutional investors and for the rest the discount was around 50%. The final offer indicated that Argentina would end up paying $10.5 billion instead of the $20 billion owed. The offer was distributed as follows: For both types of investors there would be a GDP coupon, tied to the growth of the economy. The level of adherence to the swap was above 97% of creditors.

• Institutional investors: received a bonus discount with a reduction of 66.3 % in the original debt and also a Global bond, for the interest to date with an interest rate of 8.75 %. The total amount would be paid in 2017.
• Individual investors: they received a pair bonus without any removal.

In mid-June 2010, the president announced a debt reduction plan for the provinces of Tucumán, Buenos Aires and Chaco. In March 2010, the “Bicentennial Fund for Debt Reduction” was created, providing for the use of 6,569 million dollars from the Central Bank of the Argentine Republic to pay the external debt and reduce the interest on external financing. In March 2010, Decree 298 was signed, which established through DNU 2010/09, the "Bicentennial Fund for Debt Reduction" provided for the use of 6,569 million dollars from the Central Bank of the Argentine Republic to pay the external debt and reduce interest from external financing. The year 2010 ended with a reduction in the weight of the external debt from 153.6% in 2003 to 34.7% of GDP.

Martín Redrado, president of the entity, was denounced on January 7, 2010 for "failure to comply with the duties of public officials." He resigned on January 29. At the beginning of August 2007, the Bolivarian Republic of Venezuela, bought 400 million dollars in Argentine bonds at a rate of 10.6% for the construction of a regasification plant. At the end of 2011, the Government appointed Mario Blejer, a highly respected figure both in the political sphere and in the international financier, he was appointed president of the BCRA, then he was replaced by the president of Banco Nación, Mercedes Marcó del Pont.

Cancellation of debt with IMF and government of Spain (2006)

In a speech to the United Nations General Assembly in 2004, then-President Néstor Kirchner said:

An urgent, strong and structural redesign of the IMF is necessary to enable it to prevent crises and help its solution, changing the course that led it from a lender of promotion to creditors with a demand for privileges.

Néstor Kirchner

On January 3, 2006, Argentina stopped having debts with the International Monetary Fund (IMF) by making an advance payment of 9,530 million dollars, a liability contracted between January and September 2001, with maturities scheduled until 2009. After the traumatic year 2002, all the indices were favorable to the Government: exchange rate stability ($3 to US$1), continuous growth in international reserves, drop in unemployment and poverty indicators, etc. The BCRA reserves ended that year with an increase of 4,000 million dollars. In other words, from 28,078 million dollars, the Central Bank's reserves fell to 18,580 million and ended the year with 32,037 million.

On January 31, 2007, the Governments of Argentina and Spain signed a debt restructuring agreement, associated with the loan that Spain made in March 2001, during the XVI Ibero-American Summit. The debt amounted to 982.5 million dollars and would be paid in a term of 6 years and a LIBOR rate of +140 basis points.

Agreement with the Paris Club (2014)

In January 2011, the amount owed to the Paris Club was around 9 billion dollars. Hernán Lorenzino, the Secretary of Finance, along with Amado Boudou led the procession, but the negotiations were not closed. Around half of the unpaid commitments were prior to 1983, mainly taken between the Aramburu military dictatorship and the last civic-military dictatorship (1976-1983). 9% of the debt was taken during the government of Raúl Alfonsín, while the remaining 42% was assumed during the terms of Carlos Menem and Fernando de la Rúa. Since then, Argentina has made eight renegotiation attempts until finally reaching this agreement.

On May 29, 2014, the government of Cristina Fernández de Kirchner reached an agreement to settle the debt with the Paris Club within a period of five years. Axel Kicillof headed the Argentine delegation, which also took part Pablo López (finance secretary) and Federico Thea (legal and administrative secretary); Luis Briones (director of the National Public Credit Office), Claudio Dal Din (director of Public Debt Administration), Hernán Lorenzino (head of the Debt Restructuring Unit) and Adrián Cosentino (Unit coordinator). On the side of the Paris Club, the negotiation was led by the head of the multilateral forum, the Frenchman Ramón Fernández.

It was agreed that the debt would be paid off over the next five years, with an initial cash outlay of $1.15 billion: an initial principal payment of $650 million to be made in July 2014 and the remaining 500 million dollars will be delivered in May 2015. The agreement established a minimum payment of 3% that Argentina must pay per year and set criteria for additional payments in the event of increased investments from Club member countries. If during the five-year term, the additional investments are insufficient to cover the total debt, the country can postpone the maturities for up to two years. The agreed payment scheme significantly reduces the financial cost of this unpaid debt, which goes from an average rate close to 7% to one of 3%. This is the first time that a middle-income country has managed to agree to cancel its debt with the Club within five years and without the intervention of the IMF.

[The deal] is a kind of shared effort. It is a way for governments to encourage companies to generate investments in the country. Once we begin to pay for the first losses, they will re-enable the windows so that those countries will lend them to companies that want to invest in Argentina.

Axel Kicillof

On July 28, 2014, Argentina paid 642 million dollars to the Paris Club in a first disbursement as capital owed after the agreement signed in May of that year.

Trial of the vulture funds

After the suspension of payments in 2001, the country offered in 2005 and 2010 an exchange of Argentine debt to its creditors. In both exchanges the amounts were reduced and payments were deferred, which was accepted by 93% of the bondholders. Two vulture funds, NML Capital Ltd. and EM Ltd., filed a lawsuit in the Thomas Griesa court in New York to collect the debt without haircuts. They were joined by Paul Singer's Elliott Associates fund in 2011. In November 2012, Thomas Griesa issued a ruling in favor of the vulture funds and ordered Argentina to pay the entire amount claimed —just over US$1.33 billion. Dollars. However, shortly after the ruling was suspended by the Court of Appeals for the Second District of Manhattan.

Government of Mauricio Macri (2015-2019)

Mauricio Macri, president of the Nation between 2015 and 2019.

During the government of Mauricio Macri, payment was made to the holdouts that had been left out of the 2005 and 2010 swaps. In addition, the government decided to finance the fiscal deficit of the public administration with new debt issuance. This decision caused a devaluation of the peso close to 40%, which in twenty-four hours raised its price from 9.83 to 13.95 per dollar, which led to a bank run and a 200% increase in dollar purchases in the first quarter of 2016, the exchange deficit grew 45% and the flight of foreign currency reached US$9,000 million in the first 9 months. The abrupt loss of value of the peso in a few weeks led to the widening of the exchange gap

According to INDEC data, the external debt grew by 76% between the end of 2015 and 2019. After the exchange crisis at the beginning of 2018, the Macri administration took out a loan of 50 billion dollars with the IMF, the largest in the history of the organism.

Another measure that had an impact on the public debt was the end of the limitations on the purchase of foreign currency, which produced a strong devaluation of the peso. This generated an increase of $40,000 million in the debt of the provinces, which represented 20% of their total stock.

Payment to vulture funds

On March 31, 2016, the Argentine congress repeals the Cerrojo and Sovereign Payment laws, allowing the government to negotiate a settlement with the vulture funds. On April 26, Argentina paid $9.3 billion to the vulture funds, whereupon Judge Griesa lifted the precautionary measure that weighed on the country.}}

The payment made represented a return of 1,180% with respect to its initial investment, and the country was also responsible for the fees of the legal studies that represented said funds. The prosecutor Federico Delgado described the operation as "the finishing touch of a gigantic fraud to the national State", and requested the investigation of some officials. Throughout the judicial investigation, irregularities were found such as lack of reports that support the amounts demanded, agreements signed by a show of hands, lack of individualization of the incorporated titles and payments greater than what was agreed in the sentences, among other observations. In December 2018, prosecutor Delgado requested the investigation of the officials who acted in this operation, by the commission of the crimes of negotiations incompatible with the exercise of public functions, and the possible commission of the crime of influence peddling.

According to the British newspaper Financial Times, to make payments to the vulture funds, Argentina issued the largest amount of debt for any developing nation since 1996, making it the country that has borrowed the most in the world since then.

Shortly after the deal closed, new lawsuits were filed by bondholders, such as the so-called "third generation funds," a new batch of vulture funds with bonds that did not enter debt swaps of 2005 and 2010 and they also did not accept Mauricio Macri's proposal before the New York judge in 2016. In November 2016 a new fund denounced Argentina again and new lawsuits were filed later.

Increased debt

External debt developments from 2004 to 2019, in millions of dollars and in relation to GDP.

After the first 11 months under the government of Mauricio Macri, the national state, the provincial states and the Argentine banks had received US$40,000 million in loans, with which the public debt was close to US$200,000 million, which represented almost 30% of the Gross Domestic Product (GDP).

In less than 2 years (between December 2015 and June 2017) the debt issued by the Argentine government was almost 100 billion dollars, beginning the third great cycle of Argentine debt at a faster rate than the previous one started with the military dictatorship of 1976, reaching the figure of 216,351 million dollars in December 2017. Data after June provided by private consultants bring the total gross debt to US$ 342,000 million.

Towards the end of March 2019, Argentina's gross external debt exceeded 275 billion dollars, according to the National Institute of Statistics and Censuses (Indec). Although there was a reduction of just over 2 billion dollars, dollars with respect to the value of December 2018, this originated from the variation in the exchange rate, —devaluation of the Argentine currency with respect to the dollar—, which produced this reduction in the value in dollars of the debt issued in pesos. In 2018, the total public debt amounted to more than 345 billion dollars, which represented 90% of GDP. By the beginning of 2019, the Argentine debt was already close to 97.7% of the country's GDP, being the highest in the region, while according to ECLAC data the level of indebtedness was close to almost 100% of GDP. In mid-August 2019, the public debt / GDP ratio reached 100.4%, almost double the ratio that existed in 2015. The jump in the price of the dollar after the PASO was explained in different ways. The newspaper La Nación attributed it to a response by the financial system to the proposals of the candidate Alberto Fernández, winner in the primary elections. While the former president of the BCRA, Martín Redrado, blamed President Macri, saying that he gave the order "that the dollar goes where it has to go in such a way that Argentines learn who to vote for".

New debt with the IMF

In 2017, the country once again authorized the reviews of its economy by the agency, which in its evaluation establishes that "reducing public spending is essential, especially in areas where it has increased very rapidly in recent years, particularly salaries, pensions and social transfers”.

In early 2018, the Argentine government underwent a currency run that would cause the Argentine peso to lose half its value in dollars. In May, the president publicly announced that he would turn to the IMF:

During the first two years we had favorable context and that is changing today. The interest rate is rising, the oil is rising, among other variables that we do not manage. We are from the countries of the world that most depend on external financing. [...] In the face of this new situation, I have decided to start talks with the IMF to give us a financial support line.

Mauritius Macri

One month later, the granting of a 50,000 million dollar loan was announced, the largest in the organization's history and equivalent to 11% of Argentina's GDP in 2018. Barely three months later, it was signed a new agreement with the IMF, where the loan was increased to 57,100 million dollars, to which 5,650 million dollars from the Inter-American Development Bank (IDB) were added. The axis of the IMF's requirements was that the government arrive to zero primary deficit in 2019, although in July 2019 it agreed to change the original goals and disburse the remaining amounts.

The opposition considered that it should be the congress that approved the debt taking with the IMF in accordance with article 75, subsections 4 and 7 of the National Constitution. However, the pro-government legislator Eduardo Amadeo mentioned article 60 of Law 24156, which exempts credit with international financial organizations of which the Nation is a part.

FMIgate

This section is an extract from IMFgate.[chuckles]edit]

Mauricio Macri and Christine Lagarde (FMI) in 2018.

The IMFgate is a judicial investigation initiated in Argentina in March 2021, on an alleged act of corruption committed through the agreement that then President Mauricio Macri made with the International Monetary Fund on 7 June 2018, by which the international agency lent to that country an amount of $50 billion (later expanded to $57 billion), the largest in the history of that organization, of which it delivered the original $44.5 billion. The agreement has been pointed out as a criminal act, both by the way it was processed without complying with the legal steps, the use that the Macri administration gave to the money, not contemplated in the agreement and prohibited by the IMF Statute, and by the failure to analyze the conditions of sustainability and repayment. Former President Mauricio Macri, former Minister of Finance Nicolás Dujovne and former Central Bank Presidents Federico Sturzenegger, Luis Caputo and Guido Sandleris were charged.

During the Macri government, external debt (in dollars) increased from $63.58 billion in December 2015 (14 % of GDP) to $167.514 million in June 2019 (40 % of GDP), an increase of 163 % in nominal terms and 185 % in relation to GDP. About half of the increase in external debt ($ 103.934) was caused by the loan effectively delivered by the IMF ($44 500).

The case was initiated by the Anti-Corruption Office and settled in the National Criminal and Correctional Court No. 5, under the number 3561/2019 and the letter "Macri, Mauricio et al. s/ defraudation for fraudulent administration and defraudation against the public administration". The irregularities of the case have also been investigated since March 2021, independently, by the International Monetary Fund.

In 2020, Mauricio Claver, who was a senior member of President Donald Trump's team, revealed that the loan was granted for political reasons and despite the opposition of European governments, due to the pressure of the United States, with the aim of supporting the Macri government and preventing it from losing the 2019 elections. In 2021, President Alberto Fernandez informed the National Congress that he had ordered criminal actions to be initiated for "the greatest fraudulent administration and embezzlement of public flows in history".

Government of Alberto Fernández (since 2019)

Martin Guzmán, Minister of Economy of the Nation, together with Joseph Stiglitz in 2020.

On December 10, Alberto Fernández assumed the presidency of the Nation, who received the country with a net debt of the central administration plus that of the BCRA of 333.545 million dollars. He appointed Martín Guzmán as Minister of Economy.

In January 2020, Guzmán sent a bill to Congress to restructure the country's foreign debt. In February the IMF issued a document stating that the debt is "unsustainable" and they ask creditors for an "appreciable" haircut. On April 21, the first formal offer from the Argentine government was produced.

After several rounds of negotiation, on August 31, in the midst of the COVID-19 pandemic, 93.5% of bondholders accepted the government's offer, which through collective action clauses means that it was restructured 99% of the debt issued under foreign law. The final offer was US$54.8 for every US$100 of nominal value. A few days later the restructuring of the bonds issued under Argentine law was announced with an acceptance of 98%. By June 2022, the net debt of the central administration plus that of the BCRA amounted to 403,688 million dollars.

Investigations into the legality of the debt

Cause Olmos

On April 4, 1982, the historian Alejandro Olmos filed a complaint against José Alfredo Martínez de Hoz and other civic-military government officials for taking foreign debt, which he considered illegal. The external debt went from 7,000 million dollars in 1976 to 42,000 million dollars in 1982. The destination of that debt was never clarified.

The case went through three judges until it fell to the federal court of Jorge Ballesteros, which meant a development of 18 years. On July 13, 2000, Judge Ballesteros handed down a sentence, considering the existence of at least 467 illegal acts linked to foreign indebtedness during the military era to be proven:

[External debt] has been rudely increased since 1976 through the implementation of a vulgar and agrarian economic policy that put the country on its knees through the various methods used, which were already explained throughout this resolution, and which tended, among other things, to benefit and sustain private companies and businesses - nationals and foreigners - in the midst of societies and companies of the state that reflected, through a day of privatization,

Judge Ballesteros' court ruling.

However, it was declared that said crimes had a statute of limitations, so none of those involved faced any penalty. Although this ruling qualified the external debt as "illegitimate and fraudulent", no measure was taken to remedy the situation (contrary to the provisions of the Procedural Code) and it was only arranged to send a copy of his sentence to the Legislative Branch so that it could deal with the issue.

While the case was taking place, Olmos founded the Foro Argentino de la Deuda Externa and in 1990 published his argument in book form with the title Everything you wanted to know about the debt and they always kept it from him. Olmos passed away in the year 2000 but his son, Alejandro Olmos Gaona, continues to promote the investigation of the fraudulent debt.

Investigation by the Chamber of Deputies

After issuing his ruling, Judge Ballesteros sent his resolution to both chambers of Congress to establish "the possible political responsibility that could correspond to each of the actors in the events that caused the phenomenal Argentine foreign indebtedness". Since then there have been dozens of initiatives to start the investigation in the lower house that have not prospered.

In a related case, in May 2000 the "Special Investigative Commission on illicit acts related to money laundering" was formed, chaired by Deputy Elisa Carrió. The commission's final report explains how foreign debt is linked to capital flight mechanisms, tax evasion and illegal money.

In November 2005, Cafiero presented a report entitled "The IMF and the Argentine debacle (1976-2003)", where he accused the multilateral organization of its complicity in the fraudulent debt taken by the military government and for his subsequent stance in favor of creditors.

Investigation of the bicameral commission

In April 2015, a commission made up of national senators and deputies was created with the aim of investigating the evolution of the external debt from 1976 to the present. On February 28, 2020, the commission presented its first report where it covers the history of the country's indebtedness and the renegotiations of liabilities.