For the second time in less than 15 years, Argentina has defaulted on its debt. It’s no doubt a black mark on the country as it attempts to rebuild trust on a global scale and rekindle investment from outside of its own borders, but the default of 2014 is very different than the default of 2001/2002. While the earlier default led to radical austerity measures, wage cuts, tax hikes, and a de-pegging of the Argentine Peso to the U.S. dollar, the 2014 default is more technicality and less catastrophe.
For those out of the loop, the 2001/2002 default eventually led to riots and protests from Argentine citizens who were outrages by the government’s decision to simultaneously increase the cost of living while driving wages down. That, as you can imagine, was a nightmare for travelers, but this time it’s a bit different. When a nation as large as Argentina defaults, it obviously makes waves, and we’ve rounded up a few notes for those who may be wondering how it’ll impact their travelers there.
Better deals abound: Argentina’s peso is near a record-low value compared to the Euro, the U.S. dollar, the British Pound, and pretty much every other major, stable currency. Although the default will cause inflation to rise, it also makes foreign currencies more valuable to locals. The government restricts how much foreign currency locals can purchase for investment and savings, which means that incoming tourists are the primary source of money that locals yearn for.
As of now, you can buy around 8.4 peso with a single U.S. dollar, but the underground “blue rate” is nearly double that. Exchanging cash currency using non-authorized vendors is illegal, of course -- but you may find that restaurants, gift shops, and even hotels will generally offer you a much better rates if you're paying in cash in U.S. dollars or Euros. So instead of heading to the ATM or bank, bring your own cash and ask stores if they might give you a better price.
No real threat of violence: Again, this time around, Argentina is only defaulting because of a legal quirk that would force it to settle with all bondholders, both new and old, at the same rate. As the country buys tie to negotiate a better deal, the default is not expected to dramatically impact Argentina’s taxes or currency -- which means that internal anger shouldn’t erupt into physical violence or widespread work strikes.
Plus, Argentina’s economy has improved significantly since 2002. Despite its recent default, it's still in a far better place, and “business as usual” generally applies. While locals certainly have varying opinions on the matter, companies are operating normally. Airlines, trains, buses, and other travel industries have seen little to no impact, and there’s no reason to believe that’ll change.
Planning tips: Argentina still has tens of billions of cash reserves, so it’s in no immediate danger of being unable to operate airports, hotels, and other aspects of tourism. Still, a nation in default could cause you unexpected headaches if things take a sudden turn for the worst. Those hoping to travel to Argentina in the next few months should bake a day or two of padding into their travels. Flight delays and service industry work strikes may cause limited delays and cancellations, which means that you may be required to exercise patience in getting from place to place (or even back home).
That said, those who have Argentina on their bucket list may want to visit soon. Those who have been scared off from traveling have left more lodging venues with open rooms (and in turn, lower rates). As an example, I was able to book a peak-season flight to Ushuaia this December -- arguably the southernmost city in the world and a launching point for expeditions to Antarctica -- for less than I’ve seen in years. My ticket takes me from Raleigh–Durham International Airport to USH, with a four-day stopover in Buenos Aires, all for $1,236.
Traveling to Argentina soon, or just returning from a trip? Let us know your own tips in comments below!