The Argentine external debt in 1890 and 1982

Abstract

The accumulation of foreign debt caused the episode known as the “Baring crisis” in November 1890 and in 1982 the country's inclusion among what would later be the fifteen economies mentioned in the Baker plan. The similarity of both episodes is very great: a period of indebtedness was followed by an acute crisis due to the impossibility of maintaining the flow of external capital. There are also differences, although their comparative evaluation and relative weight in the face of similarities is a debatable issue. In both cases the accumulation of debt was very fast and in a short time the services could not be paid with the surplus of the trade balance and with the proceeds of new external debts. In these contexts, in 1890 the Government immediately resorted to an arrangement implemented in the following months, which later proved to be only a provisional measure; and in 1982 the problem was not seriously addressed, there were many hesitations and delays, and even today it does not seem to have been resolved to the satisfaction of the parties involved. Having overcome the crisis of the last century, in less than ten years Argentina regained international respectability, achieved viability for external debt and obtained new credits, but internal economic conditions had changed significantly, and in particular exports had increased substantially. The present article seeks to analyze, for both periods, the process of accumulation of external debt, the problems to pay its services and the arrangements formulated to address the crisis caused by the previous phenomenon, highlighting that the restoration of confidence in 1890 and the experience of the following decade is very useful to apply in 1982.

JEL classification: F34 ; H63