The ratings on the Republic of Argentina reflect the increased probability that the country will decide to comprehensively restructure its internal and external debt as signaled by government officials that have now made debt restructuring a priority solution to the fiscal and economic crisis. Implementation of the zero-deficit policy is almost impossible to sustain with declining revenue unless the corresponding primary surplus target is lowered through a reduction in interest payments. The zero-deficit policy has, thus far, only been achieved by deferring expenses and, therefore, accumulating arrears. The short- and medium-term success of the zero-deficit policy is dependent upon Argentina's ability to share the burden of adjustment with the provinces. The negotiations with the provincial governors have been difficult and
