Economy

The importance of agriculture and livestock production is shown by the fact that this sector still provides over 50% of export earnings with sales of cereals, oilseeds, meat, and processed foodstuffs. Energy development has been a priority with emphasis on hydro and nuclear power sources to reduce dependence upon thermal power. Argentina is virtually self-sufficient in oil. There is an exportable surplus of natural gas and petroleum derivatives. Also, a rich continental shelf with more than three hundred species of fish and shellfish, sixty million hectares of timber type forests, tin, lead, zinc, and copper should also be mentioned.

After extremely high rates of inflation were recorded at the late 1980s, the Menem administration during the 90s and its economy minister Domingo Cavallo managed through a wide range of measures to stop the devaluation. A structural economic reform led into convertibility to the USD and in 1993 investment began to recover. The administration started to sell off inefficient state enterprises, a one-time bonanza that should have reduced or eliminated budget deficits. One of the side effects of privatization has been increasing unemployment, which the government has seen as an essential structural adjustment. However, ordinary people worry may be a more enduring problem. Despite all these measures but due to the high level of government corruption, the external debt rose sharply during the 1990s. The Mexican financial crisis as well as the devaluation of the neighbouring Brazilian currency in February 1999 brought down the Argentine USD based economy. Argentina rose to one of the most expensive countries in the world. Exports were not competitive to the international markets and the industry as well as foreign investments moved to cheaper Brazil. Debt rescheduling agreements negotiated by Menem’s successor Fernando De la Rúa with commercial bank creditors, IMF and World Bank, collapsed as the Government failed to fully implement its policy commitments by the late 2001. Fernando De la Rúa was forced out of power by the Argentine people. The provisional president Eduardo Duhalde abandoned the convertibility law in January 2002.