In the 1999 presidential election Fernando de la Rúa, a Radical who headed the center-left Alliance coalition, defeated Eduardo Duhalde, the Peronist candidate. De la Rúa, a former mayor of Buenos Aires, was determined to continue the economic policies of Menem, but he faced growing difficulties as the economy remained mired in recession. The de la Rúa administration remained heavily dependent on external financial support. In August 2001 devaluation of the peso appeared imminent until the Inter-American Development Bank provided a loan of $502 million. At that time, the economy was suffering a third year of continuous decline.
De la Rúa’s government instituted an austerity program, which included slashing government salaries and seizing pensions to pay creditors. In December 2001 protests and riots broke out in the streets of Buenos Aires and throughout the country in response to the austerity program and the country’s high unemployment rate. More than 20 people were killed in the protests. Shortly after the protests began, de la Rúa resigned as president. Three politicians served briefly as president before the National Congress chose Eduardo Duhalde of the Peronist Party as president in January 2002. In one of his first acts as president, Duhalde ended the practice of convertibility. Many critics believed this practice had contributed to the country’s economic problems by causing the peso to be overvalued.
With an overvalued currency, Argentina’s imports and exports became more expensive, and the country sold fewer goods abroad. By ending the practice of pegging the peso to the U.S. dollar the government was able to sharply devalue the peso, making the cost of Argentina’s products more competitive on the global market.
Argentina also defaulted on more than $80 billion of its public debt early in 2002. Duhalde served as president until 2003, when Argentina held a presidential election. In the first round, former president Carlos Menem of the Peronist Party finished first but he did not win enough of the vote for an outright victory.
Menem then faced a run-off election against fellow Peronist Néstor Kirchner, the governor of Santa Cruz province. Before the runoff took place, however, Menem withdrew from the race after polls indicated that he would not win. Menem’s withdrawal gave the presidency to Kirchner, who pledged to improve the country’s economy by creating jobs and protecting the country’s industrial sector. Kirchner restructured Argentina’s debt, offering new bonds to creditors on terms favorable to the government. Encarta "Argentina" © Emmanuel BUCHOT, Encarta, Wikipedia
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