In 2001-02, Argentina experienced one of the worst economic crises in its history. Output fell by about 20 percent over three years, inflation reginited, the government defaulted on its debt, the banking system was largely paralysed. In the early months of 2003, the economy began to recover, but there remained a long road back to sustained growth and stability. This paper examines the origins of the crisis and its evolution until early 2002. It analyses the economic forces, including a prolonged recession, leading up to the crisis and draws general policy lessons, both for countries' efforts to prevent such crises, and for the IMF's surveillance and use of its financial resources.