Elections may end attempts at orthodoxy in Argentina
Monday, July 5, 2021
Lower spending and a contraction in the monetary base have helped reduce the gap between the official and informal exchange rates and devaluation expectations. The government also came to an understanding with the Paris Club to extend debt-restructuring talks, thus averting a new default.
- A poor electoral result for the government could see a shift to more expansionary policies thereafter.
- Fiscal and monetary discipline, unusual in an election year, reflects the Peronist party’s ability to control unions and social movements.
- In 2022 the government will focus on restructuring debt with the Paris Club and the IMF, but prospects for structural reforms are poor.
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