By Daniela Morales, 10th Grade

On March 14th, the Argentinian government said that inflation had skyrocketed over 100%, stationing itself at 102.5%, the highest it has been in more than three decades (The Guardian, 2023). This news came as a slap in the face to the many Argentinians who are already struggling to get by, as 43% of the population is living below the poverty line, which accounts for about 46 million people (Lei Win & Favre, 2023). As expected from inflation, the prices of necessities, which have a high constant demand from the population, rise exponentially. People who did not have enough money for three meals a day are now even more food insecure, with the prices of  the overall food sector rising by 9.8% and those of products like meat having increased by an astonishing 20% (Gozzi, 2023). 

Some products, like meat, have experienced a rise in their cost because Argentina is experiencing a drought and the amount of cattle farmers have to support has decreased. While others, apart from being limited by bad weather conditions, have seen their prices rise as a collateral effect of the government’s ineffective economic policies. Argentina has been plagued by high inflation rates since the 1980s (Rathi, 2022). Throughout the years, the only time aside from now that inflation has gone above 100% was in 1991, and much like now, the International Monetary Fund (IMF) intervened. In 1991, the IMF implemented the Convertibility Plan, to level the Argentinian peso with the US dollar. Now, since 2022, Argentina has been engaged on a bailout plan with the IMF in which they’ll gradually receive $44 billion in the hopes that they can use this money to recover economically. In December 2022, Argentina received $6 billion out of these funds (Gozzi, 2023). 

However, although Argentina is receiving the money now without difficulties, they’ll eventually have to pay it back, which is something that worries citizens in any country that strikes a deal with the IMF. In 2018 for example, thousands of Argentinians protested at the possibility of resuming a deal worth billions of dollars that Argentina owed the IMF. The main concern of the citizens was that the IMF would provoke a climate of austerity, reducing social benefits for the people, which is something they have done many times in other countries (Lo Bianco and Soria, 2022). Although the policies the IMF is implementing right now are not austerity, they haven’t done much to tackle the growing problem which is inflation. The government, by itself, is trying to control inflation by putting price caps on products, which means that they limit how much the price of products can increase within a time frame. 

Alberto Fernandez, president of Argentina, has established that from February 1st until June 30th, the price for products to fulfill basic necessities is only allowed to increase by a maximum of 3.2% each month (Käufer, 2023). This is not something good for producers, who have to abide by these margins and charge less for their product, while they still have to pay contractors, employees, among others. Ultimately, we can see how the inflation in Argentina is a crisis that has not yet found a solution and that will not have just one solution. It will be a fairly long time before inflation reaches normal levels in Argentina, and it’ll be interesting to see how the government, international agents, and the citizens tackle this problem. 

References:

Win, T. L., & Favre, N. (2023, February 9). Top food exporter Argentina confronts rising hunger and poverty. The New Humanitarian. Retrieved March 21, 2023, from https://www.thenewhumanitarian.org/analysis/2023/02/09/Argentina-food-hunger-poverty-hyperinflation

Guardian News and Media. (2023, March 15). Argentina’s inflation rate soars past 100%, its worst in over 30 years. The Guardian. Retrieved March 21, 2023, from https://www.theguardian.com/world/2023/mar/15/argentina-inflation-rate-100-percent

Gozzi, L. (2023, March 15). Argentina inflation soars past 100% mark. BBC News. Retrieved March 21, 2023, from https://www.bbc.com/news/world-latin-america-64960385

IMF. (2003, July). The role of the IMF in Argentina, 1991-2002, Issues Paper/Terms of reference for an evaluation by the Independent Evaluation Office (IEO), July 2003. International Monetary Fund. Retrieved March 21, 2023, from https://www.imf.org/external/np/ieo/2003/arg/index.htm

Soria , H., & Lo Bianco, M. (2022, February 9). ‘no to the IMF’: Thousands protest in Argentina against debt deal. Reuters. Retrieved March 21, 2023, from https://www.reuters.com/business/no-imf-thousands-protest-argentina-against-debt-deal-2022-02-09/

Käufer, T. (2023, February 15). Argentina’s rampant inflation: Will price caps work? – DW – 02/15/2023. dw.com. Retrieved March 21, 2023, from https://www.dw.com/en/argentinas-rampant-inflation-will-price-caps-work/a-64696859