• 4 minutes England Running Out of Water?
  • 7 minutes Trump to Make Allies Pay More to Host US Bases
  • 10 minutes U.S. Shale Output may Start Dropping Next Year
  • 14 minutes Washington Eyes Crackdown On OPEC
  • 7 hours Oil-sands recovery by solvents has started on a trial basis; first loads now shipped.
  • 3 hours US-backed coup in Venezuela not so smooth
  • 50 mins Tidal Power Closer to Commercialisation
  • 7 hours New Rebate For EVs in Canada
  • 5 mins Solar to Become World's Largest Power Source by 2050
  • 1 hour Read: OPEC THREATENED TO KILL US SHALE
  • 15 hours Why U.S. Growers Are Betting The Farm On Soybeans Amid China Trade War
  • 11 hours Biomass, Ethanol No Longer Green
  • 6 hours Boeing Faces Safety Questions After Second 737 Crash In Five Months
  • 7 mins Will Trump Cave Again
  • 7 hours Oil stocks are heating up again! What's on your Watchlist?
  • 10 hours Malaysia Oil & Gas Updates
John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Argentina's Booming Economy Proves There Can be Life After Default

Quick.

Name the country whose economy despite the global recession nevertheless expanded 9.2 percent in 2010 and has kept growing in 2011 at an annual rate of about 8 percent.

Still unsure? The nation defaulted on part of its external debt, roughly $93 billion, at the beginning of 2002 after undergoing three years of brutal recession.

Argentina, Latin America's third largest economy. Quite a turnaround in nine years, when the nation quickly became a pariah state, foreign investment fled the country, and capital flow towards Argentina ceased almost completely. The government then decoupled the Argentine peso's parity with the U.S. dollar, tanking its value, depleting the Central Bank's foreign currency reserves and producing higher than average inflation.

So, how did Buenos Aires resolve the situation?

Essentially by staring down the World Bank and International Monetary Fund, which delivered dire pronouncements about Argentina's fiscal future if it did not honor its debts in full. The Argentine government remained firm and eventually refinanced its debt under a deal whereby 76 percent of the defaulted bonds were exchanged by others, of a much lower nominal value (25-35 percent of the original) and at longer terms, some of which were indexed on the future economic growth of Argentina.

Needless to say, there was still prolonged squealing by some of the private debt holders, with the International Monetary Fund assuming the role of advocate,…




Oilprice - The No. 1 Source for Oil & Energy News