After a historic default, Argentina is a far cry from its past

christian science monitorThe world’s largest economies are awash in red ink, the International Monetary Fund reported in October. And they are hard-pressed to service their debts, which on average amount to more than twice their domestic output. China accounts for much of this global rise in debt. After a leadership reshuffle this week, Beijing may start to finally tackle the problem. But one country in particular, Argentina, has shown how to change attitudes and turn around an unhealthy dependence on debt-fueled spending.

In 2001, after decades of subsidizing basic services in order to win elections, populist leaders in Argentina decided to stop paying foreign creditors. The debt default was the largest in modern history. The country saw a run on its banks. Inflation ballooned and the economy deflated. The government started to lie about economic statistics. Once one of the world’s wealthiest countries, Argentina dropped to 66th.

In 2015, voters elected a new president, Mauricio Macri, who promised to tackle the debt crisis and make Argentina a “normal” country. The former engineer and Buenos Aires mayor cut energy subsidies, ended currency controls, and started other reforms that have allowed Argentina to win back the favor of international financial markets. The economy is expected to grow 2 to 3 percent this year. Inflation is down by half. …

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During the last several decades, the United States has invested billions of dollars in trying to help the governments of Latin America and the Caribbean deliver better lives for their citizens. This has meant helping them increase internal security by combating the illicit growing and trafficking in narcotics and the activities of terrorist groups, as well as helping them to shore up their democratic and free market institutions.

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