Argentina

Argentina made repeated attempts at exchange rate-based stabilisation, in conditions of weak monetary control, before setting up an augmented currency board arrangement in 1991; the collapse of that arrangement in 2001 led to a period of stabilisation, but towards the end of the period direct controls of various kinds were being re-introduced, until a change of course from late 2015.

Years Targets and attainment Classification
1974-6 multiple exchange rates, direct controls on bank lending, bank deposits nationalised (from 1973) multiple direct controls MDC
1977-90 bank deposits denationalised, central bank gets more autonomy, interest rates still controlled, some liberalisation of forex market; repeated unsuccessful attempts at exchange rate-based stabilisation, each ending with overvaluation; alternation of multiple and unified exchange rates; recurring fiscal dominance; monetary control weak with poor instruments poorly wielded, real interest rates repeatedly negative; central bank remains important source of credit to private as well as public sector; some parallel financial markets unstructured discretion UD
1991-2001 currency board with some monetary policy (‘convertibility plan’): central bank can vary reserve requirements and has some small scope to buy government securities and to lend to private sector, also limited role as lender of last resort augmented currency board ACB
2002 exit from currency board late 2001 in conditions of forex and banking crisis and government debt default, followed by period of political and economic policy incoherence, in terms of both instruments and objectives; emergency measures of various kinds unstructured discretion UD
2003-17 some initial economic and financial stabilisation with bank and debt restructuring, economic recovery from late 2002; but from mid-2000s gradual but accelerating recourse to direct controls of various kinds (including from 2012 import and some exchange controls), and monetary financing of budget deficits (central bank independence weakened 2012); some use of wide but ineffective monetary targets; exchange rate heavily managed, including sharp depreciation January 2014, then floated from December 2015 (further large depreciation); inflation targeting formally adopted September 2016 but major institutional and operational changes required, 2017 target well overshot loosely structured discretion LSD

Selected IMF references: RED 1974 p31; RED 1977 p25, 40-1, 50-2; RED 1984 p34-5; RED 1990 Appendix IV; BP 1992, pp1-11; RED 1993 pp17-19; SI 2002 chII; SR 2005 pp20-1; SI 2006 pp4-9; SR 2006 pp16-18; Argentina Economic Developments 2013/2014/2015 (all published February 2016; no regular consultations between 2006 and 2016); SI 2016 pp92-109; SR 2016 pp21-4; SR 2017 pp17-19.

Additional reference: Wolf et al. (2008, esp. ch8).

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