ASSESSMENTS

Argentina's Economic Sins Come Back to Bite

Dec 9, 2019 | 10:30 GMT

Close-up of 500 Argentine peso bills stacked on different value notes.

A stack of Argentine peso bills.

(Shutterstock/Simon Mayer)

Highlights

  • The economic policies promised by Argentina's incoming leftist administration would add to the country's already excessive external and public sector debt levels. 
  • As a result, Buenos Aires is unlikely to reach a deal with the International Monetary Fund. That, in turn, could prevent an orderly debt restructuring and increase the risk of another default that could have ripple effects across the region. 

When he takes office on Dec. 10, Argentina's new president, Alberto Fernandez, will quickly find his hands tied, having raised expectations of simultaneously increasing government spending while lowering inflation. But while those campaign promises may have earned Fernandez the seat, the International Monetary Fund (IMF) and the many other foreign creditors who keep Argentina's lights on won't tolerate such visions of grandeur. Without a long-term program to solve the country's economic crisis, or the cash to make good on its heaping pile of IOUs, Buenos Aires will likely be forced to once again default on a large part of its debt next year, sending the already impoverished country even deeper into a tailspin. ...

Keep Reading

Register to read three free articles

Proceed to sign up

Register Now

Already have an account?

Sign In