|You are in: Talking Point|
Thursday, 21 November, 2002, 13:13 GMT
Argentina's financial crisis: What is the solution?
Argentina has defaulted on a debt repayment to the World Bank of more than $800m that was due on Thursday.
The Bank said the move meant it would not consider any new loans for the country, and access to current loans would be removed unless it was paid within the next 30 days.
Argentina had been hoping to strike a deal with the International Monetary Fund - another international lender - before the debt payment fell due.
The country's Economy Minister Roberto Lavagna said negotiations were advancing slowly, but that he hoped a deal with the IMF would be reached soon.
It is feared that defaulting on the World Bank loan could threaten future lending and humanitarian aid to Argentina.
The economic crisis in Argentina led to bank closures and bloody street protests earlier this year.
What does the situation mean for Argentina? Can the government secure IMF funds? If you're in Argentina, how will the crisis affect you?
This debate is now closed. A selection of your e-mails is published below.
The IMF has played a major role in Argentina's chaotic and catastrophic economic crisis over the past 10 years yet it refuses to accept responsibility for what has happened. Worse, it continues to insist that the government run a surplus while millions suffer increasing poverty and even hunger in a major agricultural exporting country.
Argentina and the rest of "developing" nations all around the world need to say NO to any more business with the IMF and just stop paying those outrageous amounts to them and end this economic slavery. If Third World countries refuse to use them, they will have no purpose left. Find solutions within your own borders - it can be done!
Please don't forget us. Uruguay is the "collateral damage" of the irresponsibility of our so-called "brothers" (Argentina and Brazil). First, Brazil with its devaluation, forcing our small industry into a practical collapse; second, Argentina, practically collapsing our banking system with its financial debacle; and finally, now, Argentina's default on its $800m loan from the World Bank.
Nicholas Cormier, Canada
If all repayments of interests on loans are added up, how many times over has Argentina already repaid its principal? I think there should be a limit to the profits lenders are allowed to make on loans - the amount of interests repaid should not exceed the principal by, say, more than 200% or 300%.
The situation in Argentina is an indicator that the present global economic system is fundamentally flawed. It unjustly favours nations that possess a long-standing political and economic stability and security, as well as the attendant resources. These nations then deepen their positions of strength by offering development assistance to "weaker" countries with untenable, exorbitant rates of interest. This only serves to ensure the continued prevalence of this inhuman disparity. The only way forward for the world is to create an economic system based on the principle of sharing that recognises that the resources of the world belong to all nations equally and not the privileged few to hold the rest of the world to ransom.
Suggestions that the loans to Argentina should be written off are silly. In the past countries whose loans were written off or substantially reduced have accumulated even more debts and now demand another write-off. There is no end to it without good governance and sound economic policies.
Mayra Di Lullo, Argentina
The worrying thing about the Argentine default on her debt is that Spanish banks have invested heavily in South America. The image of South America as a safe investment is being ruined by Argentina defaulting, and will result in problems for Spain and her citizens possibly wrecking any hopes of a much earlier recovery.
I think the most important thing now in Argentina, is to try to give as many as possible people food to eat. Because what, I wonder, is the importance of Argentina paying the loan if people don't have food to eat?
Gary Lord, Australia
I frankly am surprised that Argentina wasn't in worse trouble with the World Bank and wasn't going to pay the loan back at all. I believe it is the duty of the World Bank to extend the deadline to Argentina, and I hope our American friends too would pressure the Bank to be more lenient to a nation like Argentina. The economy collapsing, people rioting in the streets and on-and-off presidents, this severe economic turmoil must be solved and sanctions on the poor Latin Nation would not help whatsoever. It is a backwards approach.
I've visited Argentina twice this year, each visit separated by six months. In April, in the aftermath of the crash, people were anxious, fearful and traumatised by the consequences of their economy collapsing around them, as I found out by talking with ordinary citizens as well as civil servants, business people and senior church people. Six months later I was surprised by how little had changed: my impression is that Argentine people have very little confidence in their president or his government and are gradually coming to the conclusion that they will have to get themselves out of this crisis by their own efforts.
14 Nov 02 | Business
04 Oct 02 | Business
26 Sep 02 | Business
The BBC is not responsible for the content of external internet sites
Top Talking Point stories now:
Links to more Talking Point stories are at the foot of the page.
|E-mail this story to a friend|
Links to more Talking Point stories
To BBC Sport>> | To BBC Weather>> | To BBC World Service>>
© MMIII | News Sources | Privacy