Origins
Argentina's many years of military dictatorship (alternating with weak, short-lived democratic governments) caused significant economic problems. During the so-called National Reorganization Process (1976–1983), the country went into debt for never-finished projects, the Falklands War, and state takeover of private debts. The Neoliberal economic platform was introduced during this period. By the end of the military government the country's industries were severely affected—unemployment, calculated at 18% (though official figures claimed 5%), was at its highest point since the Great Depression.
In 1983, democracy was restored with the election of president Raúl Alfonsín. The new government intended to stabilize the economy and create a new currency (the austral, the first of its kind without peso in its name), for which new loans were required. The state eventually became unable to service this debt and confidence collapsed.
Inflation, which had stayed between 10 and 20% per month, spiraled out of control. In July 1989, Argentina saw 200% inflation for the month, peaking at 5,000% for the year. During the Alfonsin administration, unemployment did not substantially increase, but real wages fell by almost half (to the lowest level in fifty years). Prices for state-run utilities, telephone service, and gas increased substantially. Amid riots, President Alfonsín resigned five months before the end of his term and President-elect Carlos Menem took office early.
Read more about this topic: Argentine Economic Crisis
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