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LatinNews Daily - 07 April 2021

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In brief: Moody’s warns that Argentina’s default risk remains high

*International credit ratings agency, Moody’s Investors Service, has warned that the risk that Argentina could default on its foreign debts again remains high despite recent developments that should improve its financial position. Moody’s says that the increased allocation of Special Drawing Rights (SDRs) available for International Monetary Fund (IMF) member countries recently approved by the IMF Board, and higher international soya prices will boost Argentina’s public finances but will not reduce the risk of default. Moody’s explains that the increase in SDR allocations gives Argentina access to an additional US$4.3bn and that public coffers will be further boosted by the increase in soya prices. But it adds that, in its view, this will still be insufficient to cover Argentina’s spending and the US$4.15bn in debt service payments it must make this year. Noting that Argentina still owes the IMF US$44bn, Moody’s emphasises that the risk of default will not subside until the government led by President Alberto Fernández renegotiates this debt and introduces “credible” changes to its “macro-fiscal policy that rebuilds investor confidence”. Moreover, Moody’s points out that “Without access to external financial support and with limited currency reserves, we expect the risk of default to gradually increase along with the amount of external debt repayments to private creditors next year”