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A New Argentinean Default?

September 14th, 2018 · No Comments

  • While the Macri government was dealt a very bad hand in terms of the economic situation they inherited, a large debt is not one of these.
  • In a time span of just three years, they managed to run up a huge amount of dollar-denominated debt, which is now weaponized by a run on the peso.
  • A default can probably be avoided in the short term if the government proposes a credible fiscal package. But that’s not the end of it – not by a long shot.
  • The crisis will hit another phase with a slumping economy, an explosion in the debt/GDP ratio and political uncertainties.
  • So, even if Argentina manages to stabilize the situation in the short term, they’re a long way from safety, and a default remains very much a possibility.

Source: A New Argentinean Default? | Seeking Alpha

Tags: Emerging Markets