(World Bank, Washington, DC, 1999-02)
Kiguel, Miguel A.
Debt management can reduce financial
vulnerability by limiting liquidity, and rollover risks.
This note reviews Argentina's debt management strategy,
towards improving the country's credit rating to an
investment grade, providing flexibility, liquidity, and
opportunity. However, the risks of refinancing can be larger
for domestic currency debt, than for foreign currency debt.
Lessons from Argentina's experience suggest that
volatile flows can be dealt with, through prudential
regulation in the banking sector, and overall sound policies
in capital markets. Furthermore, avoiding the conversion of
private debt into public debt, also helped Argentina
overcome the crisis; but perhaps, the biggest challenge is
to develop new indicators of financial vulnerability, which
should put more weight on stocks of debt, and other
financial assets, rather than on flow indicators, such as
the current account deficit.