Argentines Gird for a Financial Storm

Eduardo Woznica shuttered his Buenos Aires pharmacy for months after Argentina defaulted on $95 billion of debt in December 2001. He was afraid looters would ransack the business his mother had started almost three decades earlier. At home, Woznica hoarded canned food and avoided going out after dark. “It was a really ugly time,” he recalls. “We lived in fear.”

Argentines’ well-honed strategies for coping with financial instability are coming in handy since the government failed to make a payment to bondholders on July 30, marking the eighth time the country has defaulted after gaining independence from Spain in 1816. The present situation isn’t as dire as the episode 13 years ago, when the default was accompanied by a 70 percent devaluation of the peso. Nevertheless, it’s prompting businesses and consumers to adopt a batten-down-the-hatches stance that threatens to plunge the economy deeper into recession. Woznica, whose company also manufactures and distributes medical supplies, says he’s scaling back production and cutting his clients’ credit lines. “In Argentina we’re all used to going to bed without knowing if things will be the same when we wake up. Now, that feeling is stronger,” he says.