Although tax receipts are high, the government appears to
feel that it is likely to run short of money. This fear is the most likely
explanation for the controversial decision to pay 15% for seven-year money from
Venezuela at the beginning of August. The move sent the Buenos Aires financial
markets into a panic. The country's risk premium (ie the chance of a default)
jumped on 8 August to over 700 basis points above US Treasuries. To be fair, the
premium fell back on 11 August when traders realised that the government had
used the Venezuelan money to buy back debt at an artificially depressed price.
End of preview - This article contains approximately 365 words.
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