From the viewpoint of the present Government, which was in office for three years, this would have been an attractive and expedient solution because the disastrous consequences of these actions over the medium term would have been faced by their successors and not by them. What would have been the consequences of following this policy option?
The country would have been forced to default on its external debt, fiscal deficit would have been around 10 per cent of GDP financed by borrowing, inflation rates would have hit the roof hurting the poor more than any one else, external and public debt burdens would have escalated, and private investors would have found an environment of macroeconomic instability.