The ratings on the Republic of Argentina reflect improved external and fiscal flexibility. Recent years of impressive economic growth and fiscal surpluses, combined with the reduction in the sovereign's debt burden in 2005 after debt rescheduling, have strengthened the sovereign's financial profile. The threat of economic disruption caused by the acrimonious process of debt rescheduling, the creditors who did not participate in the offer, and by a tense relationship with the International Monetary Fund (IMF) has also abated. The ratings on Argentina are supported by: A declining external debt burden. Net external debt is projected to decline to 100% of projected current account earnings in 2006, almost one-third the level in 2004. The lower debt levels, the diminished risk of
