Argentina Begins Repairing Its Foreign Economic Position

Argentina is beginning to loosen some of its most stringent state economic controls affecting foreign trade and its financial position. Trade restrictions on Brazil will be lifted next week, according to government statements Dec. 5. In addition, reports from November stated that the new economy minister, Axel Kicillof, is analyzing ways to reform the country's statistical agency and that Argentine President Cristina Fernandez de Kirchner has asked Kicillof to prioritize the settlement of Paris Club debt.

Together, these developments suggest that the Argentine government's policy priorities are changing following a Cabinet reshuffle Nov. 14. The government will face significant challenges in reconciling its external economic position due to significant social spending commitments domestically, risking the destabilization of the country's delicate financial situation. However, the risk is necessary if Argentina has a hope of successfully increasing foreign direct investment in critical infrastructure.