Argentina – External debt evolution in period 1966-2011

A very interesting information can be found in  Wikipedia: a list of Countries by External Debt, in which, Argentina ranks 31st.

Sovereign debt is nowadays on the foreground of any discussion, given that U.S.A. and E.U. are both trying to manage the current financial & debt crisis. Some consider this crisis new, but myself, I cannot see when the blocks overcame the 2008 crisis.

I will only show here, the evolution of External Debt in Argentina, until 2009 ($ 200 billion).

However, it’s been published recently by a local newspaper, that the present amount of the debt is $ 132 billion.

Amount evolution:

The first and probably the most notorious feature I would stress, is the changing steepness of External Debt amount showing periods of growth and periods of stand-by. The high-rising ones, relate significantly with two other meaningful factors: Governments and capital flight.

The period 1976-1982 (first amazing growing rate in the chart) corresponds to the Military Dictatorship, that impulses a strategically different Economy policy from the Ministry of Economy, by fostering financial economy and replacement of industrialization by importing goods of all industries, and therefore, dismantling the industrial production structure.

The second shocking debt growth starts in 1992 and ends in 1998, which is the second half of the first term of President Menem and almost the whole of his second period. Menem took power in 1989, supposedly belonging to the “Peronismo” centre-left party, but he quickly shifted to a Neo-conservative government, bringing to the Economy Ministry Dr. Domingo Cavallo, who had already been Head of the Central Bank, at some point in the latter Dictatorship.

The third astonishing growing period is just one year long, and spans from 2000 to 2001, in which President Fernando De la Rúa, took the debt from around $ 145 to $ 180 billion, i.e. a 24% increase.

Following shortly the default of 2001, the new Government of Nestor Kirchner, deployed a completely courageous (and quite obviously, outrageous as well), debt restructuring process, resulting in a major reduction of about $ 60 billion. Since then, the tendency changed radically, and the current government (Cristina Fernández de Kirchner), maintains the same different approach to previous ones, not only by paying interests instead of signing off stand-by credits, but mainly reducing dramatically the taking of new debt from 22% a year (2000-2001) to a yearly 1,83%.

Tendencies:

Once you get familiar with the figures and the different periods,  any trained eye, could not ignore that the evolution rate is demonstrating a pattern that is very difficult to be considered as an “outcome”. The changes in the steepness, not only follow the change of the different governments, but also show a quite constant and regular growth. This pattern could have never been the consequence of spontaneous historic evolution but the result of a deliberate strategy. It’s a policy. What the bars are showing is that the External Debt has a “logical” development. It doesn’t follow economic nor financial cycles, it ignores the different crisis that took place in the World in the time considered. It’s an aim.

If the chart was that of a corporation results, it would be an amazing example of constant success and growth of benefit. But that’s not the case.

I would like to remark some similarity in the pattern, between the financial engineering of the whole process along the last 35 years in Argentina (taking debt, moving capitals offshore, passing debt to Argentina State with collusion of governments), and the current global financial crisis, which bloomed in 2008 and still continues. States are bailing out the financial system with taxpayers funds, projecting an overwhelming debt into future generations.

3 Responses to “Argentina – External debt evolution in period 1966-2011”

  1. John Stott Says:

    This is a very interesting piece thank you. I had the misfortune to meet the Argentine people in a very stressful predicament. They generally struck me as decent people with a great love of their country. However, as your charts show, they have been victim to central banking, corrupt political classes and self serving corporate interests.
    Proof, if any were needed, of where we are all being taken. Proof that resistance is a duty to our fellow man.

    • Thanks for commenting. I’m sure you could have met any kind of argentines. In the case you mention, you’ve been lucky.
      It’s an irony that I put up this data to discuss with argentine people…

  2. Hi. I’m argentinian. I found this place looking for information on our external debt. This issue has been realived on these days with the denial of Supreme Court of the U.S.A. to treat the decision of Thomas Griesa, which puts an alarm in the entire financial world.

    Those holdouts, which are called crow founds, they bought this dirty bonds for U$S50 million, and they want to be paid around U$S900. Its a complete abuse, and the decision of Griesa is largely questioned.

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