Growth, Debt and the Banking Sector

The economic expansion involves at least two risks: inflation and fiscal comfort.

We probably have not seen the end of inflation in Argentina. While nobody is thinking in high rates of inflation, we cannot rule out that Argentina will experience inflation rates in the low two digits levels, at least in 2004. While the fiscal situation is in good shape today, there is no room for surprises in tax revenues. The government is still not servicing the debt in default while primary expenditures are on the rise. This means that a deterioration in the price of commodities or a drastic reduction in growth will again put the country under fiscal pressure.