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WorldSeptember 2 2013

Is Argentina heading for a fall?

Argentina's banks may be posting healthy profits, but such performances mask widespread fears over the wider economy's reliance on international reserves. So what is the true picture of Latin America's third largest economy?
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“Argentina’s economic outlook is becoming increasingly easy to analyse: it is more and more dependent on a single economic variable –  international reserves,” states a research note by Citi, dated from early August 2013. In other words, the country's economic situation is increasingly worrying.

Gross international reserves in Latin America’s third largest country have shrunk by $5.9bn to a six-year low of $37.1bn between the end of 2012 and the beginning of August 2013, according to Citi. This is bound to get a few investors’ hearts racing; the government relies on the central bank’s reserves to service its foreign currency debt, as it still does not have access to voluntary debt markets because of unresolved issues with holdouts from its $95bn default in 2001.

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Silvia Pavoni is editor in chief of The Banker. Silvia also serves as an advisory board member for the Women of the Future Programme and for the European Risk Management Council, and is part of the London council of non-profit WILL, Women in Leadership in Latin America. In 2019, she was awarded an honorary fellowship by City University of London.
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