Inflation, the Dollar, the Crisis and a Catastrophe Exodus: What We Can Learn from the 1973 Economy

The economy of A third Peronist government It started with a short-lived success that soon turned into a nightmare, Suppressed Inflation It already led in 1975 Rodriguez.

Then the conductor of the orchestra Jose Per GelbartEconomic Minister of the President Hector J. Compora And Juan Domingo Peron At his command 1973.

Mario Rapoport explained in his book Economic, Political and Social History of Argentina what Gelbart Searched for “restore”. Social Alliance This led to Peronism in the 40s, “the link between SMEs and the CGT”, without understanding the period between the end. Second War And in the 70s, Argentina was already integrated into the world. The Oil crisis Its material contributed to the acceleration of a situation that was already unstable, on domestic grounds, created by the conflict between the Arab states and Israel.

“The principle of Gelbart Not only does it include a series of economic instruments and measures, but it is based on the social contract signed in June 1973, which will establish the necessary conditions for economic development, redistribution of income in favor of workers, strengthening the internal market, restrictions on the operation of foreign capital and industrialization,” he said. Rapoport.

In 1973The economy grew by 6.1% and the good result would resume in 1974 with 5.3%, but then recession hit in 1975 (-0.9%) and 1976 (-1.7%).

To maintain the demand, the latter government Peron imposed Nominal salary increase In an environment Strong inflation and exchange controls A current resumption plan to avoid devaluation of the official exchange rate.

Rapoport He explained that the period plan showed a different spacing; The first stage was somewhat successful until death Peron and the second in “Continuous Marches and Counter-Marches” until the March 24, 1976 military coup. Inflation was 58% in 1972, 60.3% in 1973 and 24.2% in 1974. 182.8% in 1975 and 444% in 1976.

This, in turn, is important for explaining the fiscal deficit, the monetary issue and the rise in inflation, which was 5.2% of GDP in 1972, 7.3% in 1973, 7.9% in 1974 and 15.9% in 1975.

cheater Totally unsustainable subsidies So the price has not yet increased – and in the background Political violence– pointed out that “the foundations of the agreement began to be undermined, while the shortage of essential goods increased, because the progressive increase in costs encouraged trade in the black market, which was expanding daily and without price control influence”. Historian.

Roberto Cortes Conte Explained in The Rise and Fall of the Argentine Economy In 1973, “the initial favorable situation began to sour towards the end of the year with the government doing nothing in the financial sector, showing no interest, no concern for monetary expansion and demands for increases from businessmen and trade unions”. In an external environment where difficulties have increased due to rising import prices. “They started doing it Missing itemsPaid more than official dollars,” he explained in a sentence that, if applied today, would not lessen the austerity.

Died PeronHis wife Isabel decided to leave Gelbart By Alfredo Gómez Morales in September 1974. After a terrible experience Celestino Rodrigo Appointed and applied on the advice of the fearsome José López Rega – in the government of Isabel Perón. 100% devaluation, price liberalization and tariff hike—, the inflation rate rose from 32% accumulated between December 1974 and May 1975 to 63% between June and July of that year alone.

The Hyperinflation landed in the country and Rodrigo He was replaced by a series of short-lived ministers: Ernesto Corvalan nonglorious for five days, Pedro Bonani for nineteen, Antonio Cafiero for six months, and the banker Emilio Mondelli, a month before the military coup. Each of them sought international financial assistance, which began to arrive only after the March 1976 coup, with reserves of US$23 million to meet immediate payments from the central bank and public sector foreign debt. It has risen to about 4,941 million USD.

The fund’s managing director, Hendrikus Johannes Wittwein, promised to recommend the young Argentine official Guido Di Tella to the International Monetary Fund (IMF) board for oil facilities and another line of US$85 million. 135 million US dollars to compensate for fall in prices of export goods.

But on February 26, 1976, the IMF said it would not issue a dollar until the “institutional political panorama” was clarified, i.e., the government. Isabel Martinez de Peron The disintegration did not end with the beginning of the dictatorship a month later.

The story of desperation to get dollars has been repeated ever since, with other characters and other contexts. Rising external debt A social breakdown unimaginable at the time.