President Alberto Fernández said Sunday night that Argentina is in virtual default, comparing the economic situation to the 2001 crisis – the worst in the country's recent history.
The country is in recession and has suffered 18 months of economic crisis sparked by a currency crash. Its economy is expected to shrink by 3.1 percent in 2019.
"It is not the same as 2001, but it is similar. At that time poverty was at 57 percent, today we have 41 percent poor people; then we had a debt default, today we are in virtual default," Fernández said in an interview with TV programme La Cornice.
The president came to power on December 10 after defeating Mauricio Macri in the presidential election, and has previously expressed his willingness to pay creditors.
But on Friday the government unilaterally postponed until August paying some US$9 billion in maturities, which resulted in the country's debt being downgraded by rating agencies Fitch and S&P, who consider it in selective default.
"This is what we inherited. We cannot face this by paying the obligations that are falling. We used to have high unemployment, and today we have the same," Fernández said, drawing a comparison with the 2001 crisis when Argentina defaulted on US$100 billion. "What we did not have is the inflationary process that we have now."
The president obtained political support from Congress on Saturday with the approval of an economic emergency law that will take effect on Monday.
It includes increasing taxes on the upper and middle classes, improving benefits for the most deprived sectors, and imposing a 30 percent tax on buying and selling currencies.
Fernandez maintained the monthly US$200-limit of buying foreign currency imposed by Macri last August, noting US dollars are now scarce in Argentina – and expensive.
"Argentina ran out of dollars, it happened. It was left with so few dollars that Macri set a much-needed 'cepo' ["clamp," a reference to capital controls]," he said.
"We have to end this practice of saving in dollars," he said, referring to the historical habit of Argentines, who buy the dollar as a refuge currency against the country's inflation.
Argentina has an annual inflation of 55 percent, and a debt of almost 90 percent of its GDP.
"The level of decline in which we are is very large ... in two years Argentina became indebted in a very shocking way," he said.
Argentina's total debt is estimated to stand at around US$330 billion, which includes disbursements from the International Monetary Fund (IMF) for US$44 billion.