The Costs of a Neo-Populist Experiment
One of the most remarkable features of Argentina's debt debacle is the government's attempt to shift the burden of adjustment away from the domestic economy, transferring wealth from creditors to debtors, and from future generations to current ones. Guillermo Mondino says the long-term consequences of such a strategy are serious and warns other countries to take heed.
Most Latin American governments are heavily indebted and are
now engaged in the arduous process of reducing their
liabilities. As always, this is a painful and costly process in
which debtors and creditors both must share the burden of
adjustment. Argentina's debt crisis is clearly the largest and
most complex of its kind so far, but it is unlikely to be the
last such episode in Latin America. The outcome of events in
Argentina therefore will probably serve as a precedent for
other governments, investors and banks alike. They should all
draw on Argentina's experiences to better manage their debts
and avoid many difficulties that the country and its creditors
have had to deal with. Simultaneously, both as a cause and
effect of the adjustment processes, public opinion in many
countries in the region has veered away from the neo-liberal
reforms of the 1990s. Argentina, again, stands out...
Already have an account?
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Take a free two-week trial now for the latest news, data and market analysis.