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Return to IMF Sends Shudders Down National Spine

On May 8, Argentine President Mauricio Macri approached the IMF for a US$30 billion credit line. Argentina - heavily dependent on external financing - is being negatively impacted by a combination of external factors such as a strengthening US dollar and US Treasury yields, as well as internal factors such as mounting debt and the inability to rein in inflation. 

There is worry that a reduction in public spending along with newly perceived country risk will impact a new program of public-private partnerships (PPP) for transportation infrastructure, valued at US$30 billion.

And the needs are urgent. The network of roads, railways, ports and airports in the country has deteriorated severely in recent years due to lack of investment. Most estimates show that in the 1990s, investment in infrastructure reached on average almost 6% of annual GDP, but since then this figure has declined to about 3% per year.

As a result, Argentina is in an embarrassing 81 among 137 countries in terms of infrastructure development, far behind its Latin American counterparts such as Chile (41), Uruguay (45), Mexico (62) and Brazil (73). This is according to the the Global Competitiveness Index 2017-2018 of the World Economic Forum.

Despite the above, there is still room for optimism, as demonstrated by the first round of highway PPP contracts, though a shadow does now hover over the financial stability of Argentina and the continuity of that and future PPP programs.

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