© 2004 International Monetary Fund


© 2004 International Monetary Fund

Production: IMF Multimedia Services Division

Figures: Jorge A. Salazar

Typesetting: Alicia Etchebarne-Bourdin

Cataloging-in-Publication Data

The IMF and Argentina, 1991–2001 / [prepared by a team headed by Shinji Takagi] — [Washington, D.C.] : International Monetary Fund, Independent Evaluation Office, 2004.

p. cm. — [Evaluation report]

Includes bibliographical references.

ISBN 9781589063808

1. International Monetary Fund — Argentina. 2. Argentina — Economic policy. 3. Crisis management — Argentina. I. Takagi, Shinji, 1953– II. Evaluation report (International Monetary Fund. Independent Evaluation Office).

HC125.I53 2004

Price: US$25.00

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  • Preface

  • Abbreviations and Acronyms

  • The IMF and Argentina, 1991–2001

  • Executive Summary

  • 1 Introduction

    • Overview of Economic Developments, 1991–2001

    • Factors Contributing to the Crisis

  • 2 Surveillance and Program Design, 1991–2000

    • Exchange Rate Policy

    • Fiscal Policy

    • Structural Reforms in Macro-Critical Areas

    • The Manner of Engagement with Argentina

  • 3 Crisis Management, 2000–01

    • Second Review and Augmentation, January 2001

    • Completion of Third Review, May 2001

    • Fourth Review and Augmentation, September 2001

    • Noncompletion of Fifth Review, December 2001

    • The Decision-Making Process

  • 4 Lessons from the Argentine Crisis

    • Major Findings

    • Lessons for the IMF

    • Recommendations

  • Boxes

    • 1.1. The IMF and Argentina, 1991–2001

    • 1.2. Was the Convertibility Regime Viable?

    • 1.3. The Politics of the Convertibility Regime

    • 2.1. Economic Characteristics of Hard Peg Economies

    • 2.2. Measuring the Equilibrium Real Exchange Rate

    • 3.1. Framework and Implementation of Private Sector Involvement

    • 3.2. Financial Instruments Used During the Crisis

    • 3.3. Measures Announced or Taken During 2001 Without Prior Consultation With the IMF

    • 4.1. How and When Could an Alternative Approach Have Been Attempted?

    • 4.2. Experience with Catalytic Finance

  • Figures

    • 1.1. Inflation

    • 1.2. Capital Flows

    • 1.3. Real Quarterly GDP Growth

    • 1.4. Interest Rate Spreads over U.S. Treasuries

    • 2.1. Monthly Real Effective Exchange Rate

    • 2.2. Trade and Current Account Balances

    • 2.3. Comparison of Fiscal Targets and Actuals

    • 2.4. Projected Overall Fiscal Balances and Their Outturns

    • 2.5. Public Sector Debt Targets and Actuals

    • 2.6. Public Sector Debt and General Government Overall Balances

    • 2.7. Real GDP Growth and Unemployment

    • 3.1. IMF and Private Sector (Consensus) Forecasts for Key Program Variables

    • 3.2. Bank Deposits, January 3, 2000–December 31, 2001

    • 3.3. Evolution of Fiscal Deficit Targets and Outcomes

    • 3.4. International Reserves, January 3, 2000–December 31, 2001

  • Tables

    • 1.1. Key Economic Indicators

    • 3.1. Program Projections and Targets for 2001

    • 3.2. Fiscal Performance Under the Stand-By Arrangement in 2001

  • Appendixes

    • 1 The IMF’s Financing Arrangements with Argentina, 1991–2002

    • 2 Argentina and the IMF Prior to 1991

    • 3 A Retrospective on Argentina’s Fiscal Policy, 1991–2001

    • 4 Selected Program Conditionality, 1991–2001

    • 5 Economic Characteristics of Major Emerging Market Economies

    • 6 Debt Sustainability Analysis

    • 7 A Preliminary Analysis of the 2001 Mega-Swap

    • 8 Financial Instruments Used by Argentina During the Crisis

    • 9 Timeline of Selected Events, 1991–2002

    • 10 List of Interviewees

  • Appendix Figures

    • A5.1. General Government Fiscal Balance in Crisis Countries

    • A6.1. External Debt Sustainability

    • A6.2. Public Debt Sustainability

    • A7.1. Exchange Options

  • Appendix Tables

    • A3.1. Public Sector Balance, 1961–2000

    • A3.2. Consolidated Public Sector

    • A3.3. Adjusted Fiscal Balance

    • A3.4. Social Security Balance

    • A3.5. Federal and Provincial Fiscal Accounts

    • A5.1. Indicators of Economic Structure in Selected Emerging Market Economies

    • A7.1. An Overview of the Mega-Swap

    • A7.2. Details of Old and New Bonds

  • Bibliography

  • Statement by the Managing Director, IMF Staff Response, IEO Comments on Management/Staff Response, Statement by the Governor for Argentina, and Summing Up of IMF Executive Board Discussion by the Chairman

  • Statement by the Managing Director

  • IMF Staff Response

  • IEO Comments on Management/Staff Response

  • Statement to Executive Board Members from the Governor for Argentina, His Excellency Roberto Lavagna

  • Summing Up of IMF Executive Board Discussion by the Chairman

The following symbols have been used throughout this report:

– between years or months (e.g. 2003–04 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

/ between years (e.g. 2003/04) to indicate a fiscal (financial) year.

“Billion” means a thousand million.

Minor discrepancies between constituent figures and totals are due to rounding.

Some of the documents cited and referenced in this report were not available to the public at the time of publication of this report. Under the current policy on public access to the IMF’s archives, some of these documents will become available five years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other documents are to become available ten or twenty years after their issuance depending on the series.


This report evaluates the role of the IMF in Argentina during 1991–2001, focusing particularly on the period of crisis management from 2000 until early 2002. It was prepared by a team headed by Shinji Takagi and including Benjamin Cohen, Isabelle Mateos y Lago, Misa Takebe, and Ricardo Martin. It also benefited from substantive contributions from Nouriel Roubini and Miguel Broda. The report was approved by Montek S. Ahluwalia, then Director of the Independent Evaluation Office (IEO). Research assistance and logistical support in Argentina from Nicolas Arregui; administrative support by Annette Canizares, Arun Bhatnagar, Maria Gutierrez, and Florence Conteh; and editorial work by Ian McDonald and Esha Ray are gratefully acknowledged.

In keeping with standard IEO procedures, parties whose actions and decisions were evaluated, including IMF staff and previous Argentine authorities, were given a chance to comment on a draft of the report, but the final judgments are the responsibility of the IEO alone. The final version of the report was submitted to IMF management for comments, and also circulated simultaneously to Executive Directors. The report, with management and staff comments and the IEO response, was discussed by the Executive Board on July 26, 2004. The report is being published as discussed by the Board, along with a statement to the Executive Board by the Governor of the IMF for Argentina and the Chairman’s Summing Up of the Board discussion.

The IEO was created in 2001 to provide objective and independent evaluations on issues relevant to the IMF. It operates independently of IMF management, and at arms’ length from the IMF Executive Board.

Abbreviations and Acronyms


Currency board arrangement


Common external tariff


Debt sustainability analysis


Extended Fund Facility (IMF)


Fiscal Affairs Department (IMF)


Finance Department (IMF)


Group of Seven countries


Group of Ten countries


International Capital Markets Department (IMF)


Inter-American Development Bank


Independent Evaluation Office (IMF)


International financial institution


International Monetary Fund


International Monetary and Financial Committee (IMF)


London interbank offered rate


Letter of intent (IMF)


Monetary and Exchange Affairs Department (IMF)1


Mercado Común del Sur


Net domestic assets


Nonfinancial public sector


Net international reserves


Net present value




Policy-based guarantee (World Bank)


Policy Development and Review Department (IMF)


Private sector involvement


Real effective exchange rate


Research Department (IMF)


Stand-By Arrangement (IMF)


Special drawing right (IMF)


Supplemental Reserve Facility (IMF)


Treasurer’s Department (IMF)2


Value-added tax


World Economic Outlook (IMF)


Western Hemisphere Department (IMF)

1 Effective May 1, 2003, name was changed to Monetary and Financial Systems Department.

2 Effective May 1, 2003, name was changed to Finance Department.