ABSTRACT
This chapter focuses on privatization—the central dimension of economic liberalization—and on the case of Argentina, one of the most radical instances of privatization in Latin America. It ascertains the motives that guided the Menem administration when it embarked on the privatization drive. To tentatively assess the progress of fiscal reform in Argentina, the chapter discusses the multiple roles played by privatization within the context of that country's Convertibility Program and of the recent performance of the Argentine economy and its fiscal accounts. Privatization and the expanding money needs of the public were the two major domestic determinants underlying the strong capital inflow that has taken place since the beginning of the program. The privatization of public firms was one of the major goals of President Menem's administration. The current performance of the Argentine economy provides new evidence for the ongoing debate about the proper sequencing between stabilization and fiscal reform.
