Inflation in Argentina

Vocabulary

Video: Argentina’s Finances

Transcript

Capital controls. That’s the Argentinian government’s latest response to the countries worsening economic crisis.

Since Sunday, ordinary people have faced restrictions for foreign currency exchanges. And many are already queuing to withdraw US dollars for as long as it is still allowed.

Diego Fernandez, Buenos Aires Resident: “This takes me back to 2001; you start distrusting banks. If you have money, you’ll want to take it out of the bank, and keep it at home, until trust in the banks have been reestablished.”

Businesses are also affected: exporters now have five days to exchange their foreign currency into pesos—that’s something the government hopes will stem the pesos’ fall.

The Argentinian currency has been falling: it was tumbled nearly twenty-four percent (24%) since August 11.

That’s when conservative president Mauricio Macri lost a primary election against the left leaning Alberto Fernandez.

Investors now fear Macri could lose the election in October. And last Wednesday, Argentina’s finance ministers said the country would be unable to meet some of its debt obligations.

The country is delaying payments. Rating agencies say that puts the country closer to a default.

That would also be bad for the IMF (International Monetary Fund). It negotiated a bailout and economic reforms with the Macri administration.

But Argentinians seem to want none of it: most of them are against the reforms which have hurt the poor. They want higher wages, and potentially, a new government.

Questions

1. The government has been involved with Argentina’s economy. True or false?

2. Is there a free transaction of money among ordinary citizens, or are there limits?

3. The financial and economic situation in Argentina is unprecedented; something like this has never happened before. Is this right or wrong?

4. Do people have complete faith in credit cards and electronic payments?

5. Is there (hyperinflation) in Argentina?

6. The elections have a large influence on the country’s finances. Is this correct or incorrect? Why does the election matter? Why is it very important?

7. Do ordinary people fully support their government’s policies?

A. Is there inflation in your country? What is the inflation rate? Do people complain about inflation?

B. What is the cause of inflation? Why is there inflation?

C. Are there exchange offices? Do people exchange currencies?

D. Some people store cash in their homes. What do you think?

E. What might happen in the future?

F. Should people and governments do anything to maintain financial stability?