Argentina: Recent Developments and the Fiscal Outlook

The government is starting to face the end of the honeymoon period.

The energy crisis, the increasing problems with personal security, and the need to sanction a new tax coparticipation law are complicating the policy making process in the government. So far, the government hoped that time would solve many of the issues. This strategy has been working for the banking system. But in other sectors, such as energy, the maintenance of tariffs made the situation worse by raising demand and reducing supply, while investment is still suffering due to the lack of definition about the new rules of the game.