Dual exchange systems have political appeal to Argentina’s financiers and business people. An official international peg will provide stability for their foreign operations. But dual rates have a sorry history. On past experience, the floating domestic free-market rate will progressively undermine Argentina’s international peg as traders, smugglers and ordinary citizens find ways around the government’s exchange controls.
Argentina’s labor laws, budget and social policies are shaped not by the IMF, but by Argentina’s elected governments, which have proved unable to engineer workable reforms. The IMF’s options were limited throughout the crisis. Had it continued supporting Argentina’s inadequate reform efforts, it would have faced even greater recriminations when those efforts failed.
Now Duhalde can expect no immediate help from the IMF, which knows well that dual rates have a record of corruption and failure. Duhalde must devise a comprehensive program to reform labor markets, slash Argentina’s wasteful social welfare spending, neutralize its defaulted debt and place international trade into a strong surplus before renewed IMF support can be considered. In the meantime, Duhalde will have to rely on Argentina’s own $19 billion in dollar reserves to maintain vital exports and imports.
The IMF’s futility in Argentina will hasten the efforts of the U.S. Treasury and European authorities to rewrite the institution’s rules; the effect will be to make IMF support harder, not easier, to get. But this need not concern Duhalde right now. At this moment, the country’s burden rests squarely on his shoulders. Not the IMF’s.
Fernando de la Rua On his first day as president: ‘There won’t be any problems of governability.’ After adhering to chants demanding his resignation two years later: ‘I have heard the voice of the people.’
Ramon Puerta Day one: ‘I will only be here for 48 hours.’ True to his word, he handed over power two days later. ‘Forgive me’ for not wanting the job full time, he apologized.
Adolfo Rodriguez Saa He charged into office: ‘I will take the bull by the horns!’ A week later, he resigned. ‘Everything I achieved I did in seven days, three of which were public holidays.’
Eduardo Camano He apologized immediately: ‘I can’t wish you a happy festive season, because it would not be correct of me.’ His silence upon departure the next day was very correct of him–he never wanted the job.
