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Putting Argentina Back Together.

Aug 30, 2003

Argentina is close to a three year agreement with the International Monetary Fund that would open the way for a deal with creditors owed $64 billion.What kind of deal should they expect?

Nobody is quite sure how President Néstor Kirchner plans to put his shattered country back together. His first three months in power have produced bombastic speeches and wellplaced political blows against a few pariahs - judges, generals and even the Iranian government - that have won him some of the legitimacy he was denied in May's bungled presidential elections.

Yet Argentina is recovering faster than anyone expected from the hell of 2001-2002, when the government defaulted on $144 billion in debt, the currency slid 75% and the country plunged into its worst-ever economic depression. The economy should grow 5% this year - the first time it has expanded since 1998. Unemployment is falling and incomes are recovering. The theaters, restaurants and bars of Buenos Aires are packed well into the night once again. The beggars, scavengers and homeless who seemed to be everywhere a year ago are less visible these days. And Kirchner is popular, with his promises to promote social justice, crack down on corruption and reassert...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management