As the novel coronavirus pandemic has ravaged global economies, reports are claiming that Argentina is on the brink of financial collapse after defaulting on a major debt payment, potentially making the South American nation the first country to suffer a severe economic breakdown due to COVID-19.
As reported by the BBC, Argentina defaulted on a $500 million interest payment on May 22 and is currently discussing a way to restructure its $65 billion in foreign debt. Those involved in the deal have pushed the deadline back to June 2 in order to avoid economic catastrophe.
This is the ninth default in the country’s history, with the most infamous example occurring in 2001. At the time, the crisis was the largest default by a country in history, and destroyed two-thirds of the nation’s gross domestic product, per Bloomberg.
However, experts have warned that the coronavirus could herald an even worse disaster for Argentina, as future prospects look grim due to the severe impacts caused by the pandemic.
Argentina entered lockdown much earlier than its South American neighbors. Though this has led to a much lower death rate compared to countries like Brazil, with a respective 500 deaths versus 28,000, it has put a far greater strain on an economy that had already been plagued with instability.
“[Argentina] wants to pay what they owe to the extent they are able to pay but you can’t ask people to die to pay creditors,” says Professor Joseph Stiglitz. Stiglitz was one of a group of 100 economists from across the world who wrote a letter calling for compassionate response in negotiations.
“If in the midst of this crisis, there’s no humanity shown, no reason — and anyone understands you can’t squeeze water out of a stone — people are going to turn against market economies more generally,” he added.
That said, Argentinian citizens are far from optimistic about the financial future of the nation, claiming that they fear their country will suffer the same economic collapse that befell the country 19 years ago.
“I never thought I’d go hungry again — or be unable to provide for my daughters,” said 36-year-old Maira Ledezma, who lamented the steeply rising inflation rates.
One 21-year-old on line at a soup kitchen even declared that he believed the country’s financial system had already fallen.
“The economy has collapsed as far as I’m concerned,” said a man named Omar.
Others warned of the impossibility of surviving any further lockdown measures.
“If we have to close again, we can’t survive,” stated one struggling restaurant owner.
Argentina is far from the only country to suffer from the financial effects of lockdown measures. In the U.S., the number of those unemployed has jumped to 40 million, with a rate that matches that during the Great Depression. Moreover, it seems as if the dire numbers will not be easily fixed.
As was previously reported by The Inquisitr, the chairman of the Federal Reserve warned that the economy will likely not rebound by the end of 2020 or later.