Macri promised to bring back the country into the world, meaning greater integration with the global economy, following the old policies of the Washington Consensus. He liberalized the foreign exchange markets and renegotiated the foreign debt with the few holdouts—essentially the so-called
Vulture Funds— which had bought Argentine debt for a pittance and sued in New York courts for full payment. He paid what was demanded so that the country could borrow in dollars. The notion was, once again, that foreign funds would flow, and that this would lead to growth. The IMF was brought back, as a seal of approval for good governance. Interest rates remained low, and often negative. The combination of low interest rates, and the absence of foreign exchange controls, meant that people could freely buy dollars, which led to capital flight and significant depreciation of the peso, as before.
Initially, the depreciation was seen positively, even if Macri’s economists did not admit it. Again, one must remember that a depreciation reduces real wages, and that was seen as necessary by Macri and his economists, in order to make the economy more competitive. Also, the depreciation and the fiscal adjustment—pursued at least formally—to control inflation, threw the economy into a recession with higher unemployment. This again reduced workers bargaining power, and had the desired effect of reducing real wages. But the worst part was that foreign debt more than doubled during the next three years, from close to $70 billion to about $160 billion, with no significant increase in exports. This increase in debt essentially financed capital flight, meaning dollars were borrowed in international markets and immediately sold to the public, which caused further depreciation of the currency.