Argentina's democratic political system experienced considerable stress in 2001-2002 when the country experienced a severe economic crisis and related social unrest. In late 2001, as the banking system faltered and confidence in the government of then President Fernando de la Rua evaporated, widespread demonstrations turned violent, and the president resigned. In late December 2001, the government of interim President Adolfo Rodriguez Saa announced a default on some $132 billion in public debt, the largest sovereign default in history. Ultimately, the political system weathered the storm: first, President Eduardo Duhalde (January 2002-May 2003), a Peronist Senator selected by Congress to fill out the remainder of President de la Rua's term, implemented policies that stabilized the economy; and then, center-left President Néstor Kirchner (May 2003-December 2007), a Peronist who had served as a provincial governor of Santa Cruz in Patagonia, further enhanced internal political and economic stability. Despite some difficulties, Kirchner made popular policy moves in the areas of human rights, institutional reform, and economic policy that helped restore Argentines' faith in democracy. In June 2005, the government restructured over $100 billion in defaulted bond debt that paid an historically low recovery rate of 30% to bondholders (which caused some 24% of creditors not to accept the offer). While this was politically popular in Argentina, the government's failure to repay its arrears to official Paris Club creditors or reach a deal with private creditors for over $20 billion in defaulted bond debt prevented Argentina from full access to international capital markets. The Kirchner government's continuation of politically popular price caps on electricity and natural gas that had been imposed during Argentina's 2002 financial crisis also laid the foundation for energy shortages. Legislative elections in October 2005 demonstrated strong support for Kirchner with his leftist wing of the Peronist or Justicialist Party (PJ), known as the Front for Victory (FV), making significant gains. Kirchner would have been eligible to run again in the 2007 presidential elections, but instead supported the candidacy of his wife, Senator Cristina Fernández de Kirchner. Fernández de Kirchner won the October 2007 presidential elections with 45% of the vote, defeating her closest rival by 23%, and was inaugurated President on December 10, 2007, becoming the first woman in Argentine history elected as President. During concurrent legislative elections, in which half of the Chamber of Deputies and one-third of the Senate was contested, the President's leftist FV faction of the PJ gained further seats in Congress, and now enjoys a majority in both houses. In April 2008, former President Kirchner became head of the PJ, which should have helped shore up support within the party for his wife's presidency. Despite the strength of President Fernández within the ruling party and Congress, her political honeymoon was short-lived because of several significant challenges. These included an energy crisis early in the year and a series of farmers strikes beginning in March 2008 that led to the congressional defeat of the President's increase on taxes for soybean and sunflower seed exports. After just six months in office, President Fernández's popularity declined to a low of 20% in June 2008 (compared to nearly 60% in January), although more recently in October 2008, her popularity had risen to 30%. Looking ahead, President Fernández faces the challenge of dealing with the effects of the global financial crisis on Argentina's economy. Her government also must deal with $6.7 billion in defaulted Paris Club debt owed to foreign governments and more than $20 billion in defaulted bond debt owed to private creditors. Efforts to address these challenges will likely be put on hold because of the current global financial crisis. How the government addresses these economic issues will likely have a direct impact on its popularity, and could effect next year's mid-term congressional elections scheduled for October 2009. The Argentine economy has been booming in recent years, continuing the recovery since the 2001-2002 period when the economy contracted more than 15%. In recent years, the economy grew 8.5% in 2006, 8.7% in 2007, and is forecast to grow 6.2% in 2008. The forecast for 2009 is for a slowed growth rate of 2.2% because of weaker demand for Argentina's exports resulting from the global financial crisis. Poverty rates have declined considerably over the past several years – from a high of about 45% in 2002 because of the financial crisis to a return to the historical norm of about 21% in 2006 – but observers maintain that income inequality is still a major problem, with many people who were thrust into poverty during the 2002 crisis still struggling. With a per capita income level of $5,150 (2006), Argentina is classified by the World Bank as an upper middle income developing country. Because of the country's nightmarish experience with hyperinflation in the 1970s and 1980s, the government is sensitive to reports of consumer price increases, and there is widespread belief that the government has manipulated inflation data to project a favorable rate. According to official data, consumer price inflation amounted to 8.5% in 2007, well below estimates of economists who maintain that inflation was around 20%, one of the highest rates in the region. In September 2008, the Argentine government maintained that inflation over the past 12 months amounted to 8.7%, while private economists forecast a rate of about 20% for 2008 (down from previously estimated 25% because of a decline in commodity prices and falling demand for Argentine exports). During a visit to New York in late September 2008, President Fernández asserted that inflation was not a problem in Argentina, and she defended the government's National Statistics Institute (INDEC), the agency which has been criticized for under-reporting inflation. Under the previous Kirchner government, Argentina's relations with the International Monetary Fund (IMF) were contentious. In 2003, after months of tough negotiations, Argentina reached a three-year stand-by agreement that provided a credit line of about $12.5 billion. Although IMF accords are not normally politically popular, the accord was widely praised in Argentina as an agreement with realistic fiscal targets that would enable Argentina to deal with such issues as employment and social equity. Argentina suspended its IMF loan program in 2004 because of IMF pressure to complete debt negotiations with bondholders and adopt supporting economic reforms. In January 2006, Argentina ultimately chose to repay its $9.5 billion debt owed to the IMF rather than accede to IMF policy directives. While the move was politically popular in Argentina, some critics argue that it might have been fiscally imprudent given the alternatives of paying down more expensive debt or spending it on alternative needs such as infrastructure or social spending. In early September 2008, the Fernández government announced that Argentina would repay its defaulted $6.7 billion owed to Paris Club countries in one lump sum using its foreign reserves (rather than renegotiating a refinancing package, which normally requires IMF monitoring), but the global financial crisis appears to have scuttled these plans. Rather than paying back its defaulted Paris Club debt all at once, which would deplete the country's $47 billion in foreign reserves, the government was reportedly looking to pay it back in installments until 2025. In addition to the U.S. government, Argentina's creditor nations for the defaulted debt include the governments of Germany, Japan, Spain, the Netherlands, France, Italy, and Switzerland. Argentina's arrears owed to the U.S. government were estimated at almost $300 million at the end of 2006. Paying off the debt would be a step toward improving Argentina's ability to access international credit. Another difficult task for Argentina will be dealing with more than $20 billion in defaulted bond debt from investors, largely from Europe, but also from the United States and Japan, who refused to participate in the government's 2005 debt restructuring. In September 2008, the Fernández government said that it was exploring a deal with three major banks with the goal of paying off the holders of the 2005 defaulted debt, but the status of the deal is unclear. On October 16, 2008, the government announced a deal with Citibank, Deutsche Bank, and Barclays that would include a swap of guaranteed loans in order to reduce the country's debt payments on loans coming due in 2009-2012, but no announcement was made on a deal for the holdouts. Initially, President Fernández maintained that the financial crisis in the United States would not have an effect on the region. In a speech before the U.N. General Assembly in September 2008, Fernández criticized the U.S. "casino economy, where it was thought that only capitalism can produce money." By October, however, President Fernández was warning that the global financial crisis would have economic and social repercussions for Argentina. The global crisis already is having an effect on the Argentine economy. Argentina's growth in recent years has been fueled by its exports of primary commodities, but the rapid decline in the price of important export commodities for Argentina such as soybean products and corn will have an impact on economic growth and the government's fiscal situation. In particular, the government's heavy reliance on export taxes for its revenue will have a direct impact on funds available for government spending. In the manufacturing sector, two industries, textiles and cars, have led growth in recent years, but will also face downturns as global demand decreases. In an unexpected move on October 21, 2008, the Fernández government proposed nationalizing 10 private pension funds with holdings of around $30 billion with the stated goal of protecting individuals from losing their savings during the global financial crisis. Critics, however, believe that the government's actions are an attempt to gain access to short-term financing needs in order to offset losses in revenue.