Travel Reference
In-Depth Information
and Iguazú Falls. Foreign students from Europe and North America
flocked to semester-abroad venues in Argentina and found that they
still had money left over to take bus trips throughout the country.
The only downside to tourism for Argentines was that they could not
afford to travel abroad themselves.
The economic revival permitted President Kirchner to bargain
from a position of strength in talks with the IMF concerning
Argentina's 2002 default on its international loans. Public opinion
supported the president's recalcitrance in these talks because it held
the IMF partially responsible for the 2001 collapse, though domestic
mismanagement bore much blame as well. Negotiations stretched
over several years. Eventually, the foreign bondholders grew rest-
less and in 2005 relented to the biggest “haircut” ever, restructuring
76 percent of nearly $82 billion of debt and writing off the rest. As
a bonus, President Kirchner received a rise in his approval ratings.
Nevertheless, no sooner did he succeed in passing off the presidential
baton to Cristina Fernández de Kirchner than the economy began to
fall. Once again a combination of internal and external barbs pricked
holes in Argentina's economic balloon.
Tax and Spend Mentality
First there was the forced resignation of Economics Minister Roberto
Lavagna in 2005. He had differed too much with President Kirchner's
policies that taxed exports while holding prices down on utilities and
foodstuffs. Also, Lavagna's fellow economists had been complaining
about the official economic statistics released by the federal statis-
tical agency. They suspected that it had been reducing the actual
figures for inflation by up to 50 percent. For years, the Kirchner gov-
ernment had kept energy and utility prices artificially low, creating a
disincentive among private-sector companies to upgrade productiv-
ity and technological innovation. Esso International, a subsidiary of
Exxon Petroleum, had had enough. Complaining of low profitability
and government price fixing, Esso elected to divest itself of 500
service stations and its refinery in Buenos Aires. The company had
been operating in Argentina for 96 years. Utility companies, also
hampered by inflation and government price fixing, lacked the prof-
itability to keep up with increased demand in the booming economy.
Electricity brownouts plagued farmers as well as factory operators—
not to mention the tourists trapped in hotel elevators.
