Argentina's economic collapse and default

In December 2001 Argentina's economy came apart. On December 1 the government limited cash withdrawals from bank accounts, a measure known as the corralito. Riots and looting spread, and about 39 people were killed in the unrest. President Fernando de la Rua resigned on December 20, and the country had five presidents in about two weeks. The government then declared a default on more than 90 billion dollars in public debt, the largest sovereign default to that time.¹²

Since 1991 Argentina's peso had been fixed one-to-one to the US dollar under the convertibility law, which ended hyperinflation but made exports expensive. After 1998 the country sank into recession while the dollar rose, Brazil devalued its currency in 1999, and interest on foreign debt grew. IMF support and austerity measures failed to restore confidence. Savers ran from banks, which led to the freeze. President Eduardo Duhalde ended the peg in January 2002, and the peso fell sharply. The economy shrank by about 11 percent in 2002, unemployment passed 20 percent and more than half of Argentines were poor. Recovery began in 2003 under Nestor Kirchner, helped by a commodity boom. The government restructured the debt in 2005 and 2010, with legal fights with holdout creditors lasting until 2016. The crisis ended trust in the 1990s market model for many Argentines.¹²