Argentina’s preliminary agreement with the holdouts shows President Macri’s intention of distancing himself from the Kirchner administration while reinserting the country into the international capital markets.
The Agreement Is Still Not Final
Argentina and the most combative holdouts have reached a tentative agreement that could put an end to more than 15 years in which the country has not been able to access international capital markets.
Great News for Economic Activity
If finalized, this agreement will be great news for economic activity in the country during the next several years. Access to the international capital markets means that the administration will reduce or eliminate the need to finance its fiscal deficit by printing money, which has continued to stoke inflation and inflationary expectations.
On the negative side, the administration will have to be careful to limit the need to borrow in the international market by keeping a low fiscal deficit and finance government expenditures with “real” resources so it can limit the need to borrow over the years.
Read the complete commentary here: argentina-access-capital-markets-20160229