COVID-19 will shape Argentine debt and poverty plans

Significance

The government has again extended its self-imposed deadline to complete debt restructuring talks until June 12 and there is increased optimism about an eventual deal despite last week’s technical default. However, earlier optimism over the prospects for controlling the COVID-19 outbreak is diminishing, as measures to ease restrictions have had to be reversed.

Impacts

• Demands for moves to ease restrictions in areas with few or no cases will become more insistent.
• A failed debt restructuring and new default would prompt a protracted recession and radicalisation of policy.
• Cross-party consensus on the handling of COVID-19 looks set to unravel.