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A new Argentina

The Emerging View

27 March 2015

We believe that Argentina will be a different place a year from now with a new and more pragmatic government running the country. All the main contenders for president in the next government have similar economic programs that involve: a moderate adjustment of fiscal policy; replacing central bank financing with external borrowing; gradual monetary tightening; and quickly resolving the holdout issue. As Argentina returns to capital markets to finance the settlement with holdouts, the country’s index weight will rise considerably from today’s very low levels. The main near-term macroeconomic risk – a balance of payments crisis of Argentina’s own making – is receding due to a myriad of successful ad hoc capital raising exercises by the government.

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