Argentina: Technical Assistance Report-Staff Technical Note on Public Debt Sustainability

IMF Staff Country Reports, March 20, 2020

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Sets out IMF staff’s views on a feasible macroeconomic framework that could underpin a debt restructuring operation to restore debt sustainability with high probability.
Framework is anchored around the authorities’ broad policy announcements and predicated on IMF staff’s view that a set of policies could be fully developed and implemented to render the macroeconomic framework achievable.
Emphasizes that the authorities were in the process of elaborating the precise content of their policy agenda at the time of the report.

The feasible macroeconomic framework could underpin a debt restructuring operation that restores debt sustainability with high probability.
There are important downside risks to the feasible macroeconomic framework.
- Downside risks are especially significant if the adverse global and domestic economic effects of the fast-moving COVID-19 pandemic are larger and more prolonged than assumed in the note.
Economic conditions are described as rapidly worsening.
Financial conditions are characterized by very high volatility.
The rapid deterioration of economic and financial conditions greatly increases uncertainty about the macroeconomic framework, with potential implications for IMF staff’s assessment of debt sustainability.

Successful implementation of the feasible macroeconomic framework depends on the authorities fully developing and implementing a set of policies consistent with their broad announcements.
The assessment implies that policy design and implementation are critical to restore debt sustainability and to mitigate downside risks linked to the COVID-19 shock and volatile financial conditions.

Subject: Debt service, Debt sustainability, External debt, Fiscal policy, Fiscal stance, Macro-fiscal framework, Public debt
Keywords: Argentina, Argentina's debt service, Argentina's debt situation, cash flow, CR, debt, debt operation, Debt service, debt service capacity, debt situation, debt structure, debt sustainability, Debt sustainability, domestic-law FX-denominated debt, economic activity, exchange rate, financing, financing outlook, Fiscal stance, Global, impiied financing, ISCR, Macro-fiscal framework, restructuring operation