Argentine Default 2001

The Argentine default was announced on 23 December 2001 by interim President Adolfo Rodríguez Saá, days after President Fernando de la Rúa resigned amid mass protests known as the cacerolazos. It capped a multi-year crisis rooted in the Convertibility Plan of 1991, which pegged the peso one-to-one to the US dollar under Economy Minister Domingo Cavallo. The peg tamed hyperinflation but left Argentina unable to devalue when external shocks hit—Mexico's 1994 Tequila crisis, the 1998 Russian default, and Brazil's 1999 real devaluation all eroded competitiveness.

Throughout 2001, capital flight accelerated. In December, Cavallo imposed the corralito, restricting bank withdrawals to roughly 250 pesos per week. Riots followed, leaving dozens dead. Argentina cycled through five presidents in two weeks. In January 2002, President Eduardo Duhalde formally ended convertibility; the peso lost about 70% of its value within months, and dollar-denominated contracts were forcibly pesified.

The IMF, which had extended a US$40 billion support package in late 2000, was widely criticized for both prolonging an unsustainable peg and then withdrawing support. Joseph Stiglitz and others used the episode to attack Washington Consensus orthodoxy.

Debt restructuring came in two rounds. In 2005 under President Néstor Kirchner, Argentina offered bondholders roughly 30 cents on the dollar; about 76% accepted. A 2010 reopening brought participation to about 93%. Holdout creditors, led by NML Capital (a subsidiary of Elliott Management), litigated in US courts. Judge Thomas Griesa's 2012 ruling, applying a pari passu interpretation, blocked payments to restructured bondholders until holdouts were paid—triggering a technical default in July 2014. The dispute was settled in 2016 under President Mauricio Macri, who paid holdouts roughly US$9.3 billion and returned Argentina to international capital markets.