Argentina Imposes 'Corralito' Bank Account Freeze Under IMF Austerity, Triggering Mass Protests

The Argentine government enacts emergency measures known as the ‘corralito’ (little corral), freezing bank accounts and limiting cash withdrawals to $250 per week, triggering the final stage of a devastating economic collapse driven by IMF-imposed austerity. The freeze comes after four years of failed IMF orthodoxy: despite the Fund’s insistence that ‘failures in fiscal policy constitute the root cause’ and prescribing fiscal and monetary austerity to revive investor confidence, the economy has lost more than 20% of GDP since 1998. In July 2001, the government passed the Zero Deficit Law under IMF pressure, delivering drastic cuts in public spending and slashing state salaries and pensions by 13%. The corralito prevents Argentines from accessing their own money, leading to widespread protests marked by the incessant noise of banging pans (cacerolazos) throughout Buenos Aires. On December 19-20, police brutality reaches its peak: 39 people are killed and hundreds injured in crackdowns on protests. President Fernando de la Rúa resigns and is succeeded by five presidents in less than two weeks. On December 22, President Rodriguez Saá announces Argentina’s default on its debt to the IMF—the largest sovereign default in history at that time. When it becomes clear the IMF program is unsustainable, the Fund refuses to disburse a $1.24 billion tranche of its $21.6 billion loan, accelerating the collapse. The economy ultimately shrinks 28% from 1998 to 2002. At the depth of the crisis in 2002, over 50% of Argentines live below the poverty line, 25% are indigent, seven out of ten children are poor, unemployment reaches 23%, and 40,000 companies shut down. Argentina’s convertibility plan—pegging the peso one-to-one with the dollar since 1991 to cure hyperinflation—collapses entirely. The crisis provides a textbook case of how IMF structural adjustment creates vicious cycles of decline rather than recovery, with austerity deepening recession and enriching international creditors while devastating local populations.