Fiscal tightening, crisis and default. The IMF and Argentina during De la Rúa's term (1999-2001)

Abstract

This paper explains the marked change in the relationship between the IMF and Argentina during the Alianza administration, which in a very short time went from a cooperative link, characterized by the adoption of a program in line with the Government’s interests and the granting of extraordinary credits, to one highly conflicted, reflected in the intolerance of the Fund to the successive failures of economic targets and, finally, the suspension of financing which determined the convertibility regime fell in late 2001. We study the negotiation process between the IMF and the Government from a twolevel scheme, which suppose that strategies determine the configuration and condition the outcome of negotiations. It is proposed that the coincidence of interests contributed to the relationship between the Fund and the Government was cooperative until early 2001, when the “blindaje” was granted. But the insistence on maintaining an unsustainable monetary and exchange regime, the tightened financial policy of the U.S. and the consolidation of an intransigent position in the IMF, weakened the bargaining position of the government and encouraged the implementation of a confrontative strategy by the organism. This determined the increase in conflicts in negotiations and established a less favorable scenario for continuing convertibility.