Hyperinflation forced Menem to abandon party orthodoxy in favour of a fiscally conservative, market-oriented economic policy.

At the time, most economists thought that the ideal solution was the Washington Consensus: reduce expenditures below the amount of money earned by the state, and open  international commerce to free trade.
Alfonsín had proposed similar reforms in the past, alongside some limited privatization of state-owned enterprises; those projects were resisted by the opposing PJ party, whose internal factions were actually benefiting from the prevailing protectionist policies.

The magnitude of the crisis, however, convinced most politicians to change their minds.
Menem, fearing that the crisis might force him to resign as well, embraced the Washington Consensus and rejected the traditional policies of Peronism.

The president invited several conservative figures into his cabinet, such as Álvaro Alsogaray, as well as businessmen from Bunge and Born; Miguel Roig, the company's then vicepresident, became Menem's first appointed minister of economy on 30 May, although he would be replaced just five days after taking office due to a sudden death by myocardial infarction; in his place was appointed Néstor Rapanelli, who had succeeded Roig as vicepresident at Bunge and Born.

Congress passed the economic emergency and state reform laws.
The first allowed president Menem to reduce or remove subsidies at his discretion, and the latter to privatize state enterprises – the first being telephones and airlines.
These privatizations were beneficial to foreign creditors, who replaced their bonds with company shares.

Despite increased tax revenue and the money gained from privatizations, the economy was still unstable.
The Bunge and Born businessmen left the government in late 1989, amid a second round of hyperinflation.

The first measure of the new minister of economy, Érman González, was a mandatory conversion of time deposits into government bonds: the Bonex plan.
It exacerbated the recession, but was successful in reducing the inflation rate, which was its intended purpose.
González also lowered social welfare spending, including those for people with disabilities.

His fourth minister of economy, Domingo Cavallo, was appointed in 1991, and deepened the liberalization of the economy.
The Convertibility plan was sanctioned by Congress, setting a one-to-one fixed exchange rate between the United States dollar and the new Argentine peso, which replaced the Austral.
The law also limited public expenditures, but this was frequently ignored.
Under Cavallo, there was increased free trade, alongside a general reduction of tariffs on imports and state regulations to tackle inflation, and high taxes on sales and earnings to reduce the deficit caused by it.
Initially, the plan was a success: the capital flights ended, interest rates were lowered, inflation fell to single digits, and economic activity increased; in that year alone, the gross domestic product grew at a rate of 10,5%.

The money from privatizations allowed Argentina to repurchase many of the Brady Bonds issued during the crisis.
The privatizations of electricity, water, and gas services were more successful than previous ones.
YPF, the national oil refinery, was partially privatized as well, with the state keeping a good portion of its shares.
The project to privatize the pension funds was resisted in Congress, and was approved as a mixed system that allowed both public and private options for workers.
The national state also signed a fiscal pact with the provinces, so that they reduced their local deficits as well; Buenos Aires Province was aided with a fund that gave the governor a million pesos daily.

Although the Convertibility plan had positive consequences in the short term, it caused problems that surfaced later.
Large numbers of employees of privatized state enterprises were fired, and unemployment grew to over 10%.
Big compensation payments prevented an immediate public reaction.
Free trade and the expensive costs in dollars forced private companies to reduce t
Hyperinflation forced Menem to abandon party orthodoxy in favour of a fiscally conservative, market-oriented economic policy.
At the time, most economists thought that the ideal solution was the Washington Consensus: reduce expenditures below the amount of money earned by the state, and open  international commerce to free trade. Alfonsín had proposed similar reforms in the past, alongside some limited privatization of state-owned enterprises; those projects were resisted by the opposing PJ party, whose internal factions were actually benefiting from the prevailing protectionist policies. 
The magnitude of the crisis, however, convinced most politicians to change their minds. Menem, fearing that the crisis might force him to resign as well, embraced the Washington Consensus and rejected the traditional policies of Peronism.
The president invited several conservative figures into his cabinet, such as Álvaro Alsogaray, as well as businessmen from Bunge and Born; Miguel Roig, the company's then vicepresident, became Menem's first appointed minister of economy on 30 May, although he would be replaced just five days after taking office due to a sudden death by myocardial infarction; in his place was appointed Néstor Rapanelli, who had succeeded Roig as vicepresident at Bunge and Born.
Congress passed the economic emergency and state reform laws. The first allowed president Menem to reduce or remove subsidies at his discretion, and the latter to privatize state enterprises – the first being telephones and airlines. These privatizations were beneficial to foreign creditors, who replaced their bonds with company shares. 
Despite increased tax revenue and the money gained from privatizations, the economy was still unstable. The Bunge and Born businessmen left the government in late 1989, amid a second round of hyperinflation.
The first measure of the new minister of economy, Érman González, was a mandatory conversion of time deposits into government bonds: the Bonex plan. It exacerbated the recession, but was successful in reducing the inflation rate, which was its intended purpose. González also lowered social welfare spending, including those for people with disabilities.
His fourth minister of economy, Domingo Cavallo, was appointed in 1991, and deepened the liberalization of the economy. The Convertibility plan was sanctioned by Congress, setting a one-to-one fixed exchange rate between the United States dollar and the new Argentine peso, which replaced the Austral. The law also limited public expenditures, but this was frequently ignored. Under Cavallo, there was increased free trade, alongside a general reduction of tariffs on imports and state regulations to tackle inflation, and high taxes on sales and earnings to reduce the deficit caused by it. Initially, the plan was a success: the capital flights ended, interest rates were lowered, inflation fell to single digits, and economic activity increased; in that year alone, the gross domestic product grew at a rate of 10,5%.
The money from privatizations allowed Argentina to repurchase many of the Brady Bonds issued during the crisis. The privatizations of electricity, water, and gas services were more successful than previous ones. YPF, the national oil refinery, was partially privatized as well, with the state keeping a good portion of its shares. The project to privatize the pension funds was resisted in Congress, and was approved as a mixed system that allowed both public and private options for workers. The national state also signed a fiscal pact with the provinces, so that they reduced their local deficits as well; Buenos Aires Province was aided with a fund that gave the governor a million pesos daily.
Although the Convertibility plan had positive consequences in the short term, it caused problems that surfaced later. Large numbers of employees of privatized state enterprises were fired, and unemployment grew to over 10%. Big compensation payments prevented an immediate public reaction. Free trade and the expensive costs in dollars forced private companies to reduce t
Carlos Menem