Despite some deterioration, we expect that Argentina will maintain surpluses on both its fiscal and current accounts in 2008. Relatively high level of international reserves, adding up to 6.3 months of current account payments. High levels of human capital that support long-term growth. Growing macroeconomic inconsistencies, mainly reflected in the high inflation rate. Increasing financing needs in a context of limited access to funding in the capital markets. Rising fiscal challenges because of gradually decelerating economic activity and increasing rigidities on the structure of government spending. The sovereign credit rating on the Republic of Argentina balances the increasing challenges in managing economic risks as inflation remains relatively high and economic activity decelerates gradually with macroeconomic results that still show fiscal
