This concluding chapter draws on the previous
two chapters to summarize the major findings of
the evaluation, and presents ten lessons for the IMF
that are suggested by these findings. The chapter then
concludes with six sets of recommendations.
Major Findings
The major findings of the evaluation are summa-
rized below, organized by (i) overview of the crisis;
(ii) surveillance and program design in the precrisis
period; and (iii) crisis management.
Overview of the crisis
The catastrophic collapse of the Argentine econ-
omy in 2001–02 represents the failure of Argentine
policymakers to take necessary corrective measures
at a sufficiently early stage. The IMF on its part,
supported by its major shareholders, also erred in
failing to call an earlier halt to support for a strat-
egy that, as implemented, was not sustainable. As
the crisis deepened, the IMF was not able to engage
the authorities in evolving an alternative strategy that
might have helped mitigate the ultimate costs of the
crisis, even though these would have been inevitably
high.
The convertibility regime was an effective re-
sponse to the economic reality of the early 1990s,
when a decade of economic mismanagement had
shattered the public’s demand for local currency.
However, its success in ending hyperinflation, facili-
tating a strong recovery in the early 1990s, surviving
the Mexican crisis of 1995, and promoting strong
growth in 1996–98 masked the regime’s potential
medium-term vulnerabilities. There were favorable
factors that allowed the exchange rate regime to sur-
vive for a number of years without being severely
tested. The situation changed in 1998–99 when Ar-
gentina was hit by a series of adverse shocks, includ-
ing the devaluation of the Brazilian real, a sharp re-
duction in capital flows to emerging markets, a
strengthening dollar, and a rise in international inter-
est rates, which, taken together, led to a permanent
decline in Argentina’s equilibrium real exchange
rate.
These shocks would have been difficult enough to
handle at any t