Reconstructing Argentina

The answer is that Argentina's future can be as bright as its past, but only if Argentines recognize two facts. First, our crisis is home-grown -- made in Argentina, by Argentines. Second, our solutions will also be home-grown -- made in Argentina, by Argentines. My government is committed to designing and executing a restructuring plan that, as first steps, will stabilize the economy and reestablish credibility with the international financial community. Once this is accomplished, we aim to re-ignite economic growth, leveraging Argentina's strong resource base to spur a broad recovery.

Initially, we have been implementing policies in five areas. We have floated the peso after a decade of equality with the dollar. We are developing a disciplined fiscal framework that encompasses both the federal and provincial governments. We are implementing strict monetary policy that will be based on a single national currency, with a single-minded focus on containing inflation. We are beginning to restructure the banking sector. And we are taking many specific actions to strengthen the rule of law.

Once we finish the first phase of our program, we will work with Argentina's creditors to restructure our country's international debts and to establish a framework to reorganize the debts of our private sector. We are in the painful process of moving from an economy based on the dollar to one based on our own currency. Why? Because the fixed exchange rate we had for 10 years had become an economic straitjacket that meant Argentina would never again grow. We were not competitive enough to be pegged to the most productive economy in the world. At the end of the day, we had no choice but to free the peso and begin the process of restructuring our entire economy.

Arguably, the biggest challenge Argentina faces is not economic but political. What economic decisions are politically viable in a country with almost 30 percent unemployment? Raising taxes, cutting spending and reducing payrolls are not only unpopular but also enormously difficult in a country under massive economic stress. Yet we have done all that and more. We are proving every day that we are willing to take tough decisions and eager to move forward.

What seems lost on many international commentators who demand more austerity, more quickly implemented, is that Argentina is a democracy. I was elected president by the Congress after my popularly elected predecessor resigned. This is a process entirely consistent with the Argentine constitution, though an unusual one. It means that my government has a particular need to consult closely with our lawmakers. And it means that, as in the U.S. federal system, the governors and legislatures of our 23 provinces must consider national policies that affect local welfare.

The fact is that our Congress and governors are working closely with my government to approve and implement an economic strategy that offers the only possibility of returning Argentina to growth. They are making tough decisions, but they are making good decisions. This is not an easy process -- it is noisy and sometimes frustrating -- but it is a democratic process. I believe it is the only process that will ensure Argentina's stabilization and recovery.

Just as we need to reestablish the confidence of Argentines in their nation, we need to reestablish the confidence of the rest of the world in our program. We will grow only if we are firmly embedded in the global economy, with an economy and a society where the rule of law is paramount. This is as important to Argentines as it is to international investors and creditors.

Now we need the support of the International Monetary Fund, World Bank and Inter-American Development Bank. I ask the international agencies to assess our program, look at our actions, evaluate our commitments and measure our performance. Argentina needs to move ahead rapidly, based not on promises but on performance.

I know that the people of Argentina are not happy; there is no reason they should be, since they are living through incredibly difficult times. But I believe they will support our economic strategy, because it offers a difficult yet realistic path forward. That is the foundation of our reconstruction program -- and the basis for our reentry into the international financial system.