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Transcript of Argentina's Crisis
depreciation in Argentina’s currency, the peso,
Inflation, low or negative since the early 1990s, was 41% in 2002.
Unemployment reaches 20%
The poverty rate rose
In real terms (that is, adjusted for inflation), wages fell 23.7% in 2002.
The East Asian currency crisis of 1997-98 and the Russian currency crisis of August 1998 diminished the trust in investing in developing countries.
Fernando De la Rúa’s governmental tax increase plan. which killed the budding economic recovery
The government’s failure to take effective measures to end the recession created a crisis of confidence in government debt.
December 2001 the crisis’s final phase,government spread its problems to the private rather than trying to minimize the spread. The government chose contamination letting the issue spread .
Causes of The Argentinian Crisis
Rise in the price of soya
The devalued peso made Argentine exports cheap and competitive abroad and discouraged imports
The high price of soy in the international market produced massive amounts of foreign currency
The government encouraged import substitution
To improve tax collection, and allocated large sums for social welfare, while controlling expenditure in other fields
The huge trade surplus ultimately caused such an inflow of dollars that the government was forced to begin intervening to keep the peso from rising further
Focus on encouraging both foreigner and national investments.
Control its debt situation before it gets out of hand.
Eliminate corruption especially in the government.
What can Tunisia learn from Argentina’s Crisis
The Role of IMF in the crisis