José María Guido

José María Guido was born in Buenos Aires on 20 August 1910 as one of the two sons of Italian immigrants J.M.E. Guido and Carmen Cibeda de Guido. He grew up in the capital's San Telmo barrio[2] and graduated from the University of La Plata law school in 1940.[3]

Prior to his involvement in politics, Guido worked as a provincial lawyer and was a member of the centrist Radical Civic Union (Unión Cívica Radical or UCR), the traditional party of Argentina's middle class. In 1946, he moved to Río Negro Province to work on developing the province's hydroelectric resources and became involved in UCR activity.[3]

Within a decade, Guido had become a national political figure. When the UCR split in 1956, he joined the Intransigent Radical Civic Union (Unión Cívica Radical Intransigente or UCRI) and as appointed to the party's Executive Committee secretariat.[3] In 1958, he was elected to the Argentine Senate representing Río Negro and was named Provisional President of the Senate, making him next in line for the Presidency following the resignation of Vice-President Alejandro Gómez in November 1958.[1]

In the final years of the Frondizi administration, the Argentine economy had recovered from the economic crisis of 1959 but continued to face high inflation (by historical standards) and balance of payments deficits due to poor harvests and an overvalued currency. By March 1962, foreign exchange reserves had fallen to USD $125 million, a 70% decrease from twelve months earlier.[6] Pressured by the military and agrarian interests, Guido appointed Álvaro Alsogaray as Minister of the Economy. Alsogaray had implemented an orthodox stabilization program under Frondizi and proceeded to enact a similarly restrictive agenda marked by fiscal austerity, tighter monetary and credit policies, and removal of foreign exchange controls. Determined to avoid deficit monetization at all costs, Alsogaray was responsible for a policy where government employees and contractors were paid in bonds rather than cash; recipients who sold their bonds were typically forced to take a discount of up to 40%.[6]

The result was a severe two-year recession. Real GDP decreased by -1.6% in 1962 and -2.4% in 1963. Due to a 59% devaluation of the peso and a reduction in subsidies for public services, the inflation rate accelerated from 13.5% in 1961 to 28.1% in 1962 and 26.0% in 1963. Despite austerity measures, depressed tax revenues meant that the budget deficit increased from 5.6% of GDP in 1961 to 7.9% in 1962 and 5.8% in 1963.[6] Urban unemployment reached 8.8% in July 1963, a level that would not be exceeded for thirty years. However, the stabilization program succeeded in its primary goal of averting a balance of payments crisis. Foreign exchange reserves increased to USD $320 million by the end of 1963.[7]