Argentine Economic Crisis (1998-2002)

The Argentine economic crisis was a severe depression that shrank the Argentine economy by roughly 28 percent between 1998 and 2002, rooted in the fixed one-to-one currency board pegging the peso to the US dollar and the unsustainable public debt accumulated through the 1990s, compounded by contagion from the Russian and Brazilian financial crises. As capital fled the country the government imposed the corralito, a freeze limiting bank withdrawals to 250 dollars a week, sparking violent protests and the cacerolazo demonstrations of 19 and 20 December 2001. President Fernando de la Rua resigned and fled the presidential palace by helicopter, Argentina defaulted on 132 billion dollars in foreign debt, the largest sovereign default in history at the time, and the peso was floated and quickly lost most of its value. More than half the population fell below the poverty line at the crisis's depth and unemployment reached roughly 25 percent, making the episode a central case study in the economics of currency board regimes and sovereign debt sustainability.