The Inextricable Link between Sovereign Debt and Pensions in Argentina, 1993–2010

Abstract

AbstractEstablished with the reform of 1993, Argentina’s private pension funds became crucial sources of credit for the national government. They purchased large amounts of sovereign bonds defaulted on in 2001 and hence were key to the success of the debt restructuring of 2005. The private pillar was always vulnerable to political maneuvering; the nationalization of private pension funds in 2008 was only the last stage in an iterated process of state intervention, a function of public debt dynamics. This article argues that the financial pressures associated with Argentina’s sovereign debt burden systematically shortened the temporality of pension policy decisions, taking those away from long-term concerns about the stability of the social security system and toward the immediacy of debt-financing imperatives. Therefore, the politics of pension reform reversal in Argentina were determined by the increasingly strong and inextricable link between debt and pensions.