Background:
https://www.dw.com/en/argentinas-debt-restructuring-deal-explained/a-54432373
Questions:
– What tangible initiatives will/should Argentina pursue with access to international credit markets?
– What does it mean for economic development and investors acting or considering the Argentinian market?
– Are there any other implications to consider?
In: Economics
1. Argentina will be able to pursue an expansive financial policy by running a government deficit, funded with credit from international markets. This is critical since the entire world, not just Argentina, is in a global financial crisis.
2. This is good in the short term since it increases the Argentine government’s creditworthiness. It might encourage the Argentine government to pursue further financial reforms to balance its budgets when the global economy recovers, but this cannot be counted on.
3. If Argentina decides to restructure the debt owed to the IMF, it might come with condition that Argentina respects the independence of their central bank. This would put a stop to the high rates of inflation that has plagued the country since 2008.
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