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SOVEREIGN AND SUPRANATIONAL

ISSUER IN-DEPTH
14 October 2020
Government of Argentina – Ca stable
Annual credit analysis
OVERVIEW AND OUTLOOK
RATINGS Argentina's credit profile reflects the sovereign's high economic volatility, virtual lockout
Argentina from international market-based sources of financing and significant reliance on the central
Foreign Local bank to fund the government's large fiscal deficit, the latter of which risks increasing short-
Currency Currency
term macroeconomic imbalances. Although the sovereign's debt restructuring will result in
Gov. Bond Rating Ca/STA Ca/STA
Country Ceiling Caa3 Caa1
a materially lower interest bill and limited refinancing risk through 2024, the government's
Bank Deposit Ceiling Ca Caa1 highly uncertain macro-fiscal policy framework and absent material structural reforms,
government liquidity risk is likely to remain elevated over the medium term.
TABLE OF CONTENTS
OVERVIEW AND OUTLOOK 1 Despite the gradual tightening of capital controls, pressure will likely persist on the country's
SPECIAL TOPIC 2 currency and foreign exchange reserves, which increases the risk of a material deterioration in
CREDIT PROFILE 3 the country's debt burden, about 80% of which is denominated in foreign currency. Despite
Economic strength score: ba3 3 these significant near-term challenges, the government's debt restructuring will provide the
Institutions and governance strength government with time to correct its large fiscal imbalances over the next two to three years.
score: caa1 7
Fiscal strength score: caa3 11 The stable outlook reflects our view that, given Argentina's improved post-restructuring debt
Susceptibility to event risk score: ca 14 profile, investor losses under future debt restructurings would likely remain below 65%, a
ESG considerations 19
level consistent with a Ca rating.
Scorecard-indicated outcome 20
Comparatives 21 A positive rating action would require clear evidence of will and ability on the part of the
DATA, CHARTS AND REFERENCES 22 authorities to set a credible policy path to fiscal consolidation and to implement policies that
lead to a material and sustained reduction of macroeconomic imbalances.
Contacts Conversely, Argentina's rating would be downgraded if we anticipated underlying credit
Gabriel Torres +1.212.553.3769 conditions could lead to future debt restructurings in which losses to bondholders could
VP-Sr Credit Officer exceed the 65% mark.
gabriel.torres@moodys.com
Gabriel Agostini +1.212.553.8882 This credit analysis elaborates on Argentina's credit profile in terms of economic strength,
Associate Analyst institutions and governance strength, fiscal strength and susceptibility to event risk, which
gabriel.agostini@moodys.com are the four main analytic factors in our Sovereign Ratings Methodology. The report
Mauro Leos +1.212.553.1947 additionally includes a Special Topic section to discuss the recent rating action.
Associate Managing Director
mauro.leos@moodys.com
Yves Lemay +44.20.7772.5512
MD-Sovereign/Sub Sovereign
yves.lemay@moodys.com
Alastair Wilson +44.20.7772.1372
MD-Global Sovereign Risk
alastair.wilson@moodys.com
MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

SPECIAL TOPIC

ARGENTINA'S RATING AFFIRMED AT CA, OUTLOOK REVISED TO STABLE

On 28 September, we affirmed the government of Argentina's foreign-currency and local-currency long-term issuer and senior unsecured
ratings at Ca and changed the outlook on the ratings to stable from negative.

The outlook change to stable from negative reflected a materially lower risk that future losses would exceed those implicitly incorporated in
Argentina's Ca rating in the aftermath of the recent debt restructuring.

The affirmation of the Ca/(P)Ca ratings reflected our view that elevated credit risks remain present unless the authorities address the
fundamental macroeconomic imbalances that continue to undermine the sovereign credit profile, raising questions about Argentina's capacity
to meet future debt obligations, which are set to rise sharply after 2024.

On 4 September, Argentina finished restructuring $107 billion of its debt, including $66 billion in foreign-currency debt issued under foreign
legislation and $41 billion in foreign-currency debt issued under domestic legislation. The debt restructuring extended upcoming maturities
and reduced interest payments. As a result, Argentina's annual debt service on the newly restructured debt will remain below $5 billion until
2024, but will spike markedly thereafter.

In our opinion, even though the risk of future debt restructurings remains high as debt payments are set to rise materially and Argentina's
ability to meet them remains uncertain, losses coming from any future restructuring will likely remain within the 35% to 65% range
associated with a Ca rating.

Repayment of restructured debt will require that Argentina tap international capital markets that today remain closed. We expect Argentina's
market access to remain very limited as long as the government fails to address long-standing macro-economic imbalances.

Argentina has a long history of credit-negative policymaking and currently faces a series of macroeconomic imbalances that may deepen and
prolong an already extensive economic crisis. Macroeconomic challenges include a weak economy on its third year of recession, persistently
high inflation bolstered by central bank funding of fiscal deficits, and heightened pressures on the exchange rate and international reserves.

We expect the economy to contract by 12% in 2020 largely due to coronavirus-related lockdowns. Economic activity will recover in 2021
with GDP growth estimated at 5%, but we expect long-term trend growth to likely remain below 2% reflecting structural constraints mostly
associated with prospects of low levels of investment.

Central bank financing of the fiscal deficit, which has led to increased monetary emission, is generating additional pressures on the exchange
rate and increasing the risk of inflationary outbursts driven by a devaluation-inflation cycle. We expect fiscal deficits of close to 9% of GDP this
year and 6% in 2021 to be largely funded by the central bank.

International reserves have been under pressure. At present, the level of gross reserves stands at over $40 billion, but net liquid reserves
(excluding dollar deposits held at the central bank, gold and swaps with other central banks) are estimated below $10 billion. Further drops in
available reserves could precipitate a balance-of-payments crisis and force a large devaluation, further aggravating the economic crisis.

The government aims to negotiate a new agreement with the International Monetary Fund (IMF) to reprofile $44 billion in debt payment
payments to the IMF. Reaching an agreement with the IMF, and delivering on the targets, will not be easy as the government will have to
commit to multiyear fiscal consolidation targets and multiple structural reforms aimed at jumpstarting economic growth. In addition to
policy implementation challenges, the authorities will also encounter strong social and political opposition that could further complicate this
endeavor.

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CREDIT PROFILE
Our determination of a sovereign’s government bond rating is based on the consideration of four rating factors: Economic strength,
institutions and governance strength, fiscal strength and susceptibility to event risk. When a direct and imminent threat becomes a
constraint, that can only lower the scorecard-indicated outcome. For more information please see our Sovereign Ratings Methodology.

Economic strength score: ba3


Factor 1: Overall score

baa1

baa2

baa3

caa1

caa2

caa3
aaa

aa1

aa2

aa3

ba1

ba2

ba3
Scale

a1

a2

a3

b1

b2

b3

ca
+ Initial Final -
Factor 1: Sub-scores
Score for
Argentina ba3 Argentina
Median of countries with Ca rating

SCALE OF THE
GROWTH DYNAMICS ECONOMY NATIONAL INCOME

weight 25% weight 10% weight 30% weight 35%


Average real GDP (% change) Volatility in real GDP growth (ppts) Nominal GDP ($ bn) GDP per capita (PPP, Intl$)
aaa
aa

baa

ba

caa
ca

Economic strength evaluates the economic structure, primarily reflected in economic growth, the scale of the economy and wealth, as well as in
structural factors that point to a country’s long-term economic robustness and shock-absorption capacity. Adjustments to the economic strength
factor score most often reflect our judgement regarding the economy's flexibility, diversity, productivity and labour supply challenges.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score will
appear in the table above.

Argentina’s “ba3” economic strength is set two notches below its “ba1” initial score to reflect our view that the country’s comparatively
high wealth levels ($20,055 GDP per capita in PPP terms in 2019) and large economic size (nominal GDP of about $445 billion)
overstate the resiliency and strength of its economy. Argentina's economy, which has contracted by 0.2% annually on average over
the last ten years, has a long history of volatile growth, high and unruly inflation and frequent economic and exchange rate shocks,
which normally result in nominal GDP compression and lower purchasing power than implied by metrics. Despite significant economic
challenges, the scale of the economy and national income levels are high relative to peers and remain supportive of Argentina’s credit
profile. Other sovereigns with a similar score for economic strength include Bosnia and Herzegovina (B3 stable) and Mongolia (B3
negative).

Peer comparison table factor 1: Economic strength

Bosnia and
Argentina ba3 Median Albania Cameroon Gabon Honduras Mongolia
Herzegovina
Ca/STA B1/STA B3/STA B2/STA Caa1/POS B1/STA B3/NEG
Final score ba3 ba3 ba3 ba3 ba3 ba3 ba3
Initial score ba1 ba1 ba1 ba3 ba1 ba3 ba2
Nominal GDP ($ billion) 445.4 23.9 15.3 20.5 38.9 16.9 25.1 14.0
GDP per capita (PPP, Intl$) 20,055.3 12,661.3 13,991.1 14,219.7 3,955.2 19,057.3 5,394.8 14,309.0
Average real GDP (% change) 0.0 3.1 2.6 2.4 3.4 2.3 3.1 4.1
Volatility in real GDP growth (ppts) 4.3 1.8 1.1 1.5 0.9 2.3 0.7 4.8
Sources: National authorities, IMF, Moody's Investors Service

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Argentina's economy is larger and wealthier than peers, but volatile growth dynamics are a key credit weakness

Argentina’s nominal GDP of $445 billion in 2019 was the largest among all Caa- and Ca-rated sovereigns and eight times larger than
the median of rated peers. After multiyear recessions and significant currency depreciation, we expect nominal GDP will amount to
around $395 billion by 2021, still around seven times the Caa median. Argentina’s $20,055 GDP per capita (PPP, 2019) is also the
highest among Caa-rated peers, nearly double the Caa-Ca median (see Exhibit 1).

Exhibit 1
Argentina is larger and wealthier than peers, but experiences low or negative growth
Argentina and Caa, Ca-rated peers, size of the bubble = nominal GDP, US$ billions, 2019

$25,000 Argentina

Iraq Gabon
Barbados
GDP per capita, PPP basis 2019

$20,000

$15,000 Ecuador

Cuba
Caa - Ca median
Laos
$10,000

Zambia
$5,000 Mali
Angola DROC

$0
-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
Real GDP growth ( 2014-23 avg, %)

Source: Moody's Investors Service

Agriculture and manufacturing drive Argentina's economy

Argentina's mature, highly productive and export-oriented agriculture sector is one of the principal drivers of its economy. While
activity in the agriculture sector accounted for about 7% of GDP over the last ten years, agribusiness activity has also driven a
significant portion of output in the manufacturing sector (19% of GDP), where raw agricultural materials are processed into higher
value-added goods (see Exhibit 2). In 2019, agricultural exports accounted for 60% of the country's total exports, and of this subgroup,
close to two-thirds were manufactured products of agricultural origin (see Exhibit 3). The country's significant reliance on agriculture as
a source of growth and foreign exchange earnings means that Argentina is exposed to global commodity prices and seasonal droughts,
the latter of which have grown in frequency and severity over the last ten years.
Exhibit 2 Exhibit 3
Manufacturing and agriculture are principal drivers of the economy Agricultural products account for over half of total exports
% of total added value, 2019 Exports by major product grouping, % of GDP

Mining Primary products Manufactures of agricultural origin


Construction
4% Manufactures of industrial origin Fuel and energy
4% Manufacturing 18%
Education 19%
5% 16%

14%
Public administration
6% 12%

10%
Agriculture, livestock Business, real
and fishing estate and 8%
7% financial services
18% 6%
Transport and 4%
communications
10% 2%
Retail 0%
Other 15%
12%

Sources: INDEC and Moody's Investors Service Sources: INDEC, Haver and Moody's Investors Service

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Growth prospects will remain muted after multiple shocks and years of volatility

Economic growth has been volatile since 2011 and we expect it to remain negative through next year as coronavirus contagion and
containment efforts add to a multiyear run of severe macroeconomic shocks, including a prolonged currency crisis, extremely tight
financial conditions and a prolonged debt restructuring.

The first case of coronavirus appeared in Argentina on 3 March. Since then, the Fernandez government has employed a variety of
containment policies and fiscal stimulus efforts to offset at least some of the economic damage wrought by the pandemic. Social
distancing measures imposed are in line with most countries around the world and include a national quarantine, school and national
park closings, international travel bans and border closings to nonresidents that have traveled to highly affected countries. Although
the federal government's national quarantine has been lifted, a resurgence of cases has stalled reopening efforts and the resumption of
economic activity. To offset some of the economic damage done by the pandemic, the government has employed a 6% of GDP fiscal
stimulus program that includes a variety of measures to support firms and households during the time (see Fiscal Strength section for
more detail).

Despite government relief efforts, the pandemic's economic damage has been significant. According to the second quarter GDP print,
the Argentine economy contracted by about 16% on a sequential basis and by 20% relative to the same period last year. The steep
decline reflects both the length and extent of coronavirus containment efforts, which are among the longest and most stringent in the
region, as well as existing economic weaknesses pertaining to the country's prolonged debt restructuring, which did not conclude until
the third quarter.

Although Argentina's early and strong response to the coronavirus helped contain the pandemic in its first few months, the steady rise
in the country's number of daily confirmed coronavirus cases increases the likelihood that quarantine measures will remain tighter for
longer. In the last week of August, the country confirmed about 9,000 new cases of the coronavirus daily, about twice the amount
from late July. In response, on 30 August, the government again extended national quarantine through 20 September, with stricter
social distancing rules in areas with greater contagion levels, namely the metropolitan Buenos Aires region – which includes the capital
city and its 35 surrounding districts in the greater Buenos Aires province – and other urban areas across the country.

Overall, we estimate that the Argentine economy will contract by 12% this year, its third consecutive year of recession, before
rebounding to 5.2% growth in 2021 (see Exhibit 4). The country’s external sector remains a bright spot for the economy, although a
severely weakened global economy presents downside risk to its performance over the next year (see Exhibit 5). Our expectations for
continued growth volatility extend a pattern of stop-and-go growth dynamics that have persisted since 2011, a key weakness of the
sovereign's economy, which grew at an annual average rate of just 0.4% in 2011-19. Economic volatility is credit negative because it
restricts long-term economic and financial planning. Most peers have reported higher growth and steadier rates, with Ca- and Caa-
rated sovereigns having grown 3.4% annually on average over the same period.
Exhibit 4 Exhibit 5
Coronavirus outbreak will yield a historically sharp recession this Argentina's external sector is unsupportive of growth during the
year pandemic
Real GDP growth, % change year-over-year Domestic and external sector, % change year-over-year
Argentina Caa - Ca median Domestic demand External sector GDP
8%
5%
6%
4% 0%
2%
0% -5%
-2%
-4% -10%

-6%
-15%
-8%
-10%
-20%
-12%
-14%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F

Sources: INDEC and Moody's Investors Service Sources: INDEC and Moody's Investors Service

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MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Argentina's competitiveness lies in its human capital, but inefficient product and labor markets and macroeconomic
instability are key impediments

Argentina's competitiveness is largely driven by its human capital, with a population that exhibits a comparatively long life expectancy
and a skilled workforce that benefits from a relatively lengthy and high-quality education. However, the human capital component of
the country’s overall competitiveness is largely offset by a weak enabling environment and inefficient product and labor markets, the
combination of which contribute to Argentina’s overall ranking of 83 out of 141 countries in the World Economic Forum’s 2019 Global
Competitiveness Index (GCI).

The country’s persistently high and sticky inflation, combined with increased pressure on the peso, have significantly reduced
macroeconomic stability, where Argentina ranked 139 out of 141 countries in the 2019 GCI. Product markets are weakened by a
combination of distortionary taxes and subsidies and limited competition in retail and network services. Limited trade openness and
high tariffs act as additional impediments to the quality and efficiency of product markets, where Argentina ranked 120th last year.

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MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Institutions and governance strength score: caa1


Factor 2: Overall score

baa1

baa2

baa3

caa1

caa2

caa3
aaa

aa1

aa2

aa3

ba1

ba2

ba3
Scale

a1

a2

a3

b1

b2

b3

ca
+ Initial Final -
Factor 2: Sub-scores
Score for
Argentina caa1 Argentina
Median of countries with Ca rating

QUALITY OF INSTITUTIONS POLICY EFFECTIVENESS

weight 20% weight 20% weight 30% weight 30%


Quality of Legislative and Executive
Institutions Strength of Civil Society and the Judiciary Fiscal Policy Effectiveness Monetary Policy Effectiveness
aaa
aa

baa

ba

caa
ca
Institutions and governance strength evaluates whether the country’s institutional features are conducive to supporting a country’s ability and
willingness to repay its debt. A related aspect is the government's capacity to conduct sound economic policies that foster economic growth and
prosperity. Institutions and governance strength is most often adjusted for the track record of default, which can only lower the final score.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score will
appear in the table above.

The score for Argentina's institutions and governance strength is set at “caa1,” below the initial score of “b1” to reflect the government's
long track record of default, the most recent of which occurred in a series of missed debt payments in mid-2019 and mid-2020. Our
assessment also reflects years of unpredictable and unsustainable fiscal and monetary policy frameworks, which have historically
resulted in fiscal and external imbalances that leave the economy prone to recession. High and volatile inflation dynamics are another
indication of Argentina's low policy effectiveness. Inflation reached 57% in 2019, its highest in almost three decades, and we expect
it to remain at least 40% through at least 2021. Strong pass-through from the peso's depreciation and high financial volatility remain
impediments to lower and more stable prices, limiting policy effectiveness. Other sovereigns with a similar score for institutions and
governance strength include Suriname (Caa3 negative) and Zambia (Ca stable).

Peer comparison table factor 2: Institutions and governance strength

caa1 Bosnia and


Argentina Angola Laos Nicaragua Suriname Zambia
Median Herzegovina
Ca/STA Caa1/STA B3/STA Caa2/NEG B3/STA Caa3/NEG Ca/STA
Final score caa1 caa1 caa1 caa1 caa1 caa1 caa1
Initial score b1 caa1 caa1 caa1 b1 b3 b3
Quality of legislative & executive institutions b caa caa caa caa b b caa
Strength of civil society & judiciary ba caa caa caa ca caa ba b
Fiscal policy effectiveness b b b caa b ba caa caa
Monetary & macro policy effectiveness b b caa b b ba caa b
Fiscal balance/GDP (3-year average) -6.2 -4.8 -1.2 -1.2 -5.5 -3.7 -9.8 -10.7
Average inflation (% change) 35.6 11.4 18.3 0.8 3.4 4.4 12.2 11.6
Volatility of inflation (ppts) 14.1 3.1 8.4 1.7 2.3 1.6 16.2 3.4
Sources: National authorities, IMF, Moody's Investors Service

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MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Governance indicators portray a weak picture of political institutions

The Worldwide Governance Indicators (WGI) form the starting point of our assessment of institutional strength, with a particular focus
on three indicators: 'Government Effectiveness,' 'Rule of Law,' and 'Control of Corruption.' Argentina's scores on all three indicators
are higher than the median of Caa-rated sovereigns, and have improved since 2015 (see Exhibit 6). 'Regulatory Quality' and 'Rule of
Law' stand out because Argentina's scores were lower than peers' in 2015, but are now higher. However, it is unclear if improvement in
institutional indicators will persist given the high uncertainty around the policy direction under President Fernandez’s administration.

Exhibit 6
It is unclear whether recent improvements to institutional indicators will persist under the new administration
Worldwide Governance Indicators, percentile rank, 2018

Argentina (2018) Argentina (2015) Median - Ca

Political Stability
70
60
50
Regulatory Quality 40 Government Effectiveness
30
20
10
0

Voice and Accountability Rule of Law

Control of Corruption

Sources: Worldwide Governance Indicators and Moody's Investors Service

We assess the quality of legislative and executive institutions (one of two subfactors that describe political institutions within the
‘institutions and governance strength’ factor) at “b,” reflecting the frequent political noise that arises from infighting and the poor level
of coordination of economic policy between the two branches of government. In recent years, tensions between the executive and
legislature have marred business confidence, distracted from adopting policies to facilitate investment and curb overregulation, and
imposed unnecessary fiscal and economic costs.

We assess the strength of civil society and the judiciary (the second subfactor that describes political institutions) at “ba.” Civil
society is strong and supported by comparatively high levels of education as well as ample press freedom that allows for criticism of
government policies. Together, these factors support a relatively high 'Voice and Accountability' score, which ranks Argentina near the
70th percentile of the rated sovereign universe. While Argentina's judicial system is formally independent, it is not always impartial
and has been, at times, used as a tool by the executive branch to prosecute political opponents while simultaneously shielding itself
from legal scrutiny. The Fernandez government has moved forward a bill to modernize the criminal justice system through a series of
reforms including having prosecutors investigate cases instead of judges and increase the number of federal criminal courts to reduce
notoriously lengthy delays and the concentration of power in the hands of a few judges. While the public largely agrees that judicial
reform is necessary, most remain distrustful of government efforts to reform the court system.

Fiscal and monetary policy effectiveness is very weak

Argentina is characterized by a long history of unsustainable fiscal and macroeconomic policymaking, which have contributed to
perennial fiscal and economic crises over the last century. Fiscal policy predictability is weak, and since 2010 the government has relied
heavily on central bank financing of its large fiscal deficits while limiting reforms to its revenue and expenditure framework.

Monetary policy effectiveness is also weak. Argentina has a multi-decade history of high and volatile inflation, the result of weak
policy credibility and a mix of structural factors including, but not limited to, the bi-monetary nature of the Argentine economy, strong
exchange rate pass-through into domestic prices, and backward-looking inflation wage indexation.

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After a brief, and ultimately unsuccessful, experimentation with an inflation targeting regime under the Macri administration,
Argentina's central bank (BCRA) has taken a new policy direction under the Fernandez administration. In late December 2019, the
central bank published its “Objectives and Plans” for 2020, the first hint at the new monetary policy framework that would be
undertaken by the BCRA’s newly appointed president, Miguel Pesce. In the document, the BCRA outlines four pillars that the bank will
follow under his stewardship:

» Reduce inflation rates while attending to the financing needs of the Treasury

» Maintain the floating exchange rate regime within the context of exchange rate regulation via capital controls

» Stimulate the supply of credit to private sector SMEs

» Foster financial stability and inclusion

The four pillars suggest that the new monetary policy framework will be less strict in its attempt to rein in inflation and more active in
its attempt to boost macroeconomic activity.

In particular, the intent to support the Treasury’s financial needs is an explicit deviation from the monetary policy pursued under the
previous administration and we believe the central bank will increase its role and support for Treasury operations as the government
wades through the coronavirus outbreak. We also think that the BCRA is unlikely to use the monetary policy rate as a tool to combat
inflation in the near term after reducing it gradually to 38% earlier this year (see Exhibit 7), another material shift from the predecessor
government that let the benchmark rate rise to sky levels in an effort to rein in price inflation.

We believe that neutral real interest rates combined with a more active approach in stimulating economic activity risks slowing the
downward trajectory in inflation that we have forecasted for 2020-21 (45% and 40%, respectively). However, the government is also
taking offsetting measures to break inflation inertia, including reforming the inflation adjustment made to pension and wages, which
are widely recognized as main contributors to upward price pressures. Central bank survey inflation expectations remain tamed for
2020 as a result of the deep economic recession, but they have steadily risen for 2021 (see Exhibit 8), likely a reflection of the central
bank’s continued financing of the government’s deficit.
Exhibit 7 Exhibit 8
Argentina's monetary policy rate has been held steady since March Inflation expectations are tame in 2020, but steadily rising for 2021
2020 Central bank survey expected inflation for 2020-21, %
Monetary policy target rate, %
90% 2020 2021
50%
80%
45%
70% 40%
60% 35%
30%
50%
25%
40%
20%
30% 15%

20% 10%
5%
10%
0%
0%

Note: the figures represent the median analyst's estimate for EOP inflation in a given
Sources: BCRA, Haver Analytics and Moody's Investors Service
month
Sources: BCRA and Moody's Investors Service

A tightly managed exchange rate combined with capital controls will reduce depreciation contribution to inflation

Consistent with the BCRA’s second pillar, we expect the monetary authority to maintain very strict capital controls and a tightly
managed floating peso. Argentina announced capital controls in September 2019 and have tightened them periodically since. The
tightening of capital controls has come in tandem with the abandonment of the government’s crawling band exchange rate regime,

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originally adopted under the previous administration. While this new framework is likely to provide short-term respite to depreciation
pressure on the peso and its strong pass-through effect on prices, we believe that prolonged capital controls could stimulate black
market peso activity, risking medium-term financial instability and further inflationary pressure. Indeed, the black market peso trades
around 60% higher than the official peso as of September, which suggests that the country’s currency is overvalued and risks a
disorderly unification of the black market and official rates.

Transparency of data reporting has improved materially

The Macri administration helped reverse the prior government’s practice of misreporting basic macroeconomic data. New leadership in
the official statistics institute has helped produce more high quality, credible information, including a revamping of the national income
accounts and new data for consumer inflation, the latter of which made it difficult for investors to calculate returns on investment,
particularly with respect to holdings of inflation-indexed debt. Overall, the improved institutional environment allows for a more robust
and accurate analysis of the country's economy and finances. However, it is unclear whether or not data accuracy and independence
will be maintained under the Fernandez administration.

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MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Fiscal strength score: caa3


Factor 3: Overall score

baa1

baa2

baa3

caa1

caa2

caa3
aaa

aa1

aa2

aa3

ba1

ba2

ba3
a1

a2

a3

b1

b2

b3

ca
Scale

+ Final Initial -
Factor 3: Sub-scores
Score for
Argentina caa3 Argentina
Median of countries with Ca rating

DEBT BURDEN DEBT AFFORDABILITY

weight 25% weight 25% weight 25% weight 25%


General government interest payments (% General government interest payments (%
General government debt (% of GDP) General government debt (% of revenue) of revenue) of GDP)
aaa
aa

baa

ba

caa
ca
Fiscal strength captures the overall health of government finances, incorporating the assessment of relative debt burdens and debt affordability as
well as the structure of government debt. Some governments have a greater ability to carry a higher debt burden at affordable rates than others.
Fiscal strength is adjusted for the debt trend, the share of foreign currency debt in government debt, other public sector debt and for cases in which
public sector financial assets or sovereign wealth funds are present. Depending on the adjustment factor, the overall score of fiscal strength can be
lowered or increased.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score will
appear in the table above.

We set Argentina's fiscal strength score at “caa3” above the initial score of “ca,” to reflect the government's modestly improved fiscal
position following the government's debt restructuring, which will keep interest payments lower over the next two to three years.
Nonetheless, the government's debt and interest burdens have deteriorated materially over the last five years and were substantially
worsened by the onset of the country's currency crisis in 2018. The score also reflects the country's high share of foreign-currency-
denominated government debt (80% of total), which exposes the government’s balance sheet to exchange-rate risk. The significant
depreciation of the peso has exposed this vulnerability and has manifested itself in a material weakening of the sovereign's debt
and interest burdens, ultimately resulting in the government's 2019 default last year. Despite these fiscal challenges, about 35% of
Argentina's government debt is held by other public sector entities, which partially reduces the sovereign's exposure to rollover risk.

Peer comparison table factor 3: Fiscal strength


caa3 Mozambiqu Republic of
Argentina Ghana Suriname Angola Zambia
Median e the Congo
Ca/STA B3/NEG Caa3/NEG Caa1/STA Caa2/STA Caa2/STA Ca/STA
Final score caa3 caa3 caa3 ca ca ca ca
Initial score ca caa1 caa3 ca ca caa2 ca
Gen. gov. debt (% of GDP) 90.1 75.3 63.2 75.3 106.0 96.8 80.9 97.8
Gen. gov. debt (% of revenue) 490.6 413.8 413.8 324.3 494.7 320.6 253.6 474.5
Gen. gov. interest payments (% of GDP) 3.4 3.6 5.7 3.6 5.9 3.3 2.1 6.1
Gen. gov. int. payments (% of revenue) 18.4 18.4 37.0 15.6 27.4 10.8 6.6 29.4
Sources: National authorities, IMF, Moody's Investors Service

Significant government relief measures will ease virus' economic toll at the expense of the government's already weak
public finances

The government has enacted a broad package of fiscal measures, estimated at about 6% of GDP, to mitigate the quarantine's negative
effect on households and the economy. While we expect the relief measures to reduce the economic damage that would have

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occurred in their absence, the additional spending will materially increase the fiscal deficit along with the fiscal challenges faced by the
government through next year.

In terms of households, measures introduced thus far include emergency payments to self-employed and informal workers who have
lost all forms of income, salary stipends for workers from companies considered “critical,” and a temporary moratorium on eviction
and rent and price freezes on a variety of goods through the end of 2020. The government has also stepped in to ease the coronavirus'
economic toll on firms, postponing or reducing up to 95% of employer payments to the social security agency, paying up to 50% of
salaries for workers employed at companies facing financial crisis, gradually expanding eligibility criteria.

Increased government spending will drive the fiscal deficit higher in 2020. Although the government has signaled that it intends to
meet some of the coronavirus-related expenditures through a new wealth tax, we expect total revenue collection to be depressed as a
result of the deep economic recession and insufficient to offset the higher level of temporary relief spending. As such, we estimate the
government's fiscal deficit will rise to about 8.8% of GDP this year, from 3.8% of GDP in 2019. Given the government's lack of market
access, we expect the vast majority to be financed by the central bank through increased monetary emission, which risks generating
additional pressures on the exchange rate and increasing the risk of inflationary outbursts driven by a devaluation-inflation cycle.

Looking ahead, we expect the government's fiscal deficit to fall only gradually to 6.0% of GDP next year. Although our baseline
scenario expects Argentina's real economy to rebound by about 5% next year, revenue collection will likely be slow to recover as
unemployment remains high and broader economic activity takes time to come back online. On the expenditure front, coronavirus-
related relief measures are likely to unwind only slowly given steady growth in Argentina's new daily coronavirus cases, which continues
to complicate and stall the country's reopening efforts.

Currency depreciation has contributed to a material deterioration in fiscal metrics

Deep economic recession and currency depreciation over the last three years has resulted in a substantial weakening of the
government's fiscal strength. The government debt and interest burdens rose to 90% of GDP and 18% of revenue last year, up
from 56% and 11% in 2017, respectively. With around 75% of the general government's debt denominated in foreign currency, the
sovereign's balance sheet is highly exposed to exchange rate shocks.

Looking ahead, we expect general government debt to stabilize around 90% of GDP through 2022 (see Exhibit 9), given our
expectation that the central bank will likely monetize a significant portion of the government's fiscal deficit. However, we expect debt
affordability to improve and the interest burden to fall to about 8% of revenue through 2022 as a result of the interest rate reductions
under the government's debt restructuring (see Exhibit 10).
Exhibit 9 Exhibit 10
Argentina's debt burden will remain high despite debt restructuring The sovereign's interest bill will fall as a result of the restructuring
Government debt, % of GDP Interest payments, % of government revenue
Argentina Caa - Ca median Argentina Caa - Ca median
100% 20%

90% 18%

80% 16%

70% 14%

60% 12%

50% 10%

40% 8%

30% 6%

20% 4%

10% 2%

0% 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F

Source: Moody's Investors Service Source: Moody's Investors Service

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Government debt restructuring will likely help alleviate some of the fiscal challenges through 2024

On 31 August, Economy Minister Martín Guzmán announced that private creditors agreed to accept the government's offer to
restructure its debt, bringing an end to the country's prolonged default and debt restructuring that began in late 2019. Under the
negotiated agreement, the government restructured foreign-currency obligations owed to private creditors under foreign legislation
(about $66 billion) and domestic legislation ($26 billion; see Exhibit 11). It also restructured about $15 billion of local legislation
foreign-currency debt held by public entities. Combined, the total restructured debt stock amounts to about $107 billion, equivalent to
a third of the government's total debt. About two-thirds of the government's privately held debt is denominated in foreign currency,
most of which is contracted under foreign legislation (see Exhibit 12).
Exhibit 11 Exhibit 12
A third of Argentina's debt is privately held or issued under foreign Two-thirds of privately held debt is in foreign currency, most under
legislation foreign legislation
Government debt by legislation, currency and holder, $ billions Privately held government debt by currency and legislation, % of total
Government debt by type $ billions
Total Debt 321 Pesos
20%

Foreign Legislation Debt 139


Private 66
Official 73
o/w IMF 44
Domestic Legislation Debt 182 FC foreign
legislation
Public Sector 133 FC local
57%
legislation
Foreign currency 86 23%
Pesos 47
Private Sector 49
Foreign currency 26
Pesos 23
Sources: IMF, Moody's Investors Service
Total privately-held debt 115
Foreign Currency 91
Foreign legislation 66
Local legislation 26
Pesos 23
Sources: IMF, Moody's Investors Service

Although the debt renegotiation was not based on haircuts to principal payments, maturity extensions will keep debt repayments very
low through 2024. Under the new amortization schedule, dollar-based principal repayments due to private creditors will remain below
$5 billion annually through 2024, compared to about $9 billion prior to the restructuring. Meanwhile, interest rate reductions will cut
the average interest on foreign law bonds between 2020-30 to 3% from 7%, significantly reducing the cost of the government's debt,
which had risen substantially over the last five years.

We believe that the government will seek to renegotiate its debt and existing program with the IMF. Repayments on the government's
paused, $57 billion IMF program are scheduled to begin next year, with large repayments due in 2022-23. Although discussions
concerning a new IMF program are in their nascency, we expect the two parties to reach a new agreement in the first half of 2021 on
the IMF condition for a gradual decline of fiscal deficits and central bank financing of the treasury.

Despite the alleviation on public finances from the debt restructuring, we note that the pandemic-induced recession and the
coronavirus-related containment and stimulus efforts introduce downside risk to our growth and fiscal forecasts, as a deeper recession
would likely necessitate higher levels of deficit-financed stimulus to support the economy. The negative credit implications of a higher
debt burden are mitigated by the large proportion of intra-public sector debt (around 35% of the total), which partially lowers rollover
risk.

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Susceptibility to event risk score: ca


Factor 4: Overall score

Scale aaa aa a baa ba b caa ca


+ Final -
Factor 4: Sub-scores
Score for
Argentina ca Argentina
Median of countries with Ca rating

Overall adjustment to Factor 4 Susceptibility to Event Risk: 0

MIN. EXTERNAL VULNERABILITY RISK


Political Risk Government Liquidity Risk Banking Sector Risk External Vulnerability Risk
aaa

aa

a
baa

ba
b
caa

ca
Susceptibility to event risk evaluates a country’s vulnerability to the risk that sudden events may severely strain public finances, thus increasing
the country’s probability of default. Such risks include political, government liquidity, banking sector and external vulnerability risks. Susceptibility
of event risk is a constraint which can only lower the scorecard-indicated outcome.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score
will appear in the table above.

Argentina's susceptibility to event risk is “ca,” driven by government liquidity risk. Other sovereigns with a similar score include Ecuador
(Caa3 negative) and Lebanon (C no outlook).

Political risk score: ba

Exhibit 13
Peer comparison table factor 4a: Political risk
Democratic
Argentina ba Median Bahrain Belarus Republic of El Salvador Gabon Suriname
the Congo
Ca/STA B2/STA B3/STA Caa1/STA B3/POS Caa1/POS Caa3/NEG
Final score ba ba ba ba ba ba ba
Voice & accountability, score[1] 0.6 -0.7 -1.4 -1.4 -1.5 0.0 -0.9 0.3
Political stability, score[1] 0.0 -0.5 -0.8 0.4 -2.1 -0.4 -0.2 0.1
[1] Composite index with values from about -2.50 to 2.50: higher values correspond to better governance.
Sources: National authorities, IMF, Moody's Investors Service

We assess political risk as “ba,” which incorporates a recent history of haphazard policymaking, a highly contentious political process
and the chance that a new administration would be less committed to the Stand-By Arrangement (SBA) program with the IMF, which
could close the door on international funding. Lower commitment to fiscal consolidation would put Argentina's IMF funding at risk and
reduce the government's ability to meet its external financing needs.

On 10 December 2019, Alberto Fernandez was sworn in as Argentina's president. His ascension to the presidency follows his victory in
the 27 October presidential election, in which he won 48.1% of the vote, with the next highest vote share going to former president
Mauricio Macri, who won 40.4%. Mr. Fernandez's coalition, Frente de Todos, controls a majority of the seats in the Senate and possibly

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in the Lower House as well as a result of negotiations with smaller regional parties. But the center-right Cambiemos coalition retains
119 of the 257 seats in the Chamber of Deputies, representing the largest opposition block.

The Fernandez government faces an economy in multiyear recession and a public weary of economic adjustment programs. We believe
the population's demands for change in the direction of policy will lead to a looser fiscal policy. Alternatively, private creditors and
the IMF will likely request additional fiscal consolidation as a condition for a significant restructuring of debt owed to the IMF. The
Fernandez administration will have to manage these two opposing forces, introducing a high degree of uncertainty over Argentina's
credit prospects.

Government liquidity risk score: ca

Exhibit 14
Peer comparison table factor 4b: Government liquidity risk

Argentina ca Median Ecuador Lebanon Belize Mozambique Suriname Zambia


Ca/STA Caa3/NEG C/NOO Caa1/NEG Caa2/STA Caa3/NEG Ca/STA
Final score ca ca ca caa caa caa caa
Initial score ca ca caa caa caa caa b
Ease of access to funding ca ca ca caa caa caa caa b
Gross borrowing requirements (% of GDP) 28.4 23.0 11.7 43.6 19.5 17.1 23.2 22.2
Sources: National authorities, IMF, Moody's Investors Service

We set Argentina’s government liquidity risk score at “ca” to reflect the sovereign's virtual lockout from market-based funding,
strained liquidity and extremely tight financial conditions, traits that are likely to be compounded by the coronavirus and persist as the
Fernandez administration wades through the country's prolonged and severe currency crisis.

Funding conditions have deteriorated dramatically since the PASO election and pandemic, effectively barring the sovereign from
market-based financing. Although Argentina’s sovereign spread narrowed sharply after the finalization of the government’s debt
restructuring, financing conditions remain tight, with Argentine bond yields still about 1,300 basis points above US treasuries (see
Exhibit 15).

Nonetheless, rollover risk has materially decreased in the context of the government’s restructured debt profile. The sovereign has
limited principal repayments to private creditors over the next three years, reducing the risk of redefault within that time frame (see
Exhibit 16). Nevertheless, a high degree of uncertainty clouds our fiscal outlook for Argentina as the government will have to introduce
and implement a credible fiscal policy program that allows it to reaccess markets before principal payments increase in 2025.
Exhibit 15 Exhibit 16
Funding conditions will likely remain very tight despite Rollover risk has diminished markedly as a result of the debt
improvement post-restructuring restructuring
Argentina's sovereign spread and EMBIG, basis points External bond amortizations to private creditors, $ billions
Argentina EMBIG Post-restructuring Pre-restructuring
4,500 $12

4,000
$10
3,500

3,000 $8

2,500
$6
2,000

1,500 $4

1,000
$2
500

0 $0
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Sources: JP Morgan, Haver, Moody's Investors Service Note: External amortizations on foreign and local legislation debt
Sources: Ministry of the Economy, Moody's Investors Service

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We believe that the IMF will continue to play an important role in Argentina’s eventual return to the markets. Argentina has access
to about $10 billion still under its IMF program, but it remains unclear whether the Fernandez administration intends to unlock those
funds, nor is it clear under what conditions the IMF would continue with the disbursement schedule. Given that it has political and
financial “skin in the game,” we believe the IMF is unlikely to abruptly end its relationship with Argentina. A cancellation could trigger a
severe market reaction, generate significant macro-financial instability and further compromise Argentina's weak credit standing. Still,
we believe the program is likely to remain on hold until the IMF gains more clarity on the future direction of policy – fiscal policy in
particular – and the Fernandez administration’s debt restructuring plans, including payments owed to the IMF.

Banking sector risk score: baa

Exhibit 17
Peer comparison table factor 4c: Banking sector risk

Argentina baa Median Angola Belarus Costa Rica Ghana Jamaica Nicaragua
Ca/STA Caa1/STA B3/STA B2/NEG B3/NEG B2/STA B3/STA
Final score baa baa baa baa baa baa baa
Initial score baa baa baa baa baa baa baa
BCA[1] ca ba3 caa2 b3 b2 b3 -- --
BSCE[2] ba3-b3 ba3-b3 ba3-b3 ba3-b3 ba3-b3 ba3-b3 ba3-b3 ba3-b3
Total domestic bank assets (% of GDP) 30.9 81.7 62.1 59.4 64.6 36.9 84.7 55.0
[1] BCA is an average of Baseline Credit Assessments (BCAs) for rated domestic banks, weighted by bank assets.
[2] Where we have no or small rating coverage in a system, we estimate the risk of Banking Sector Credit Event (BSCE) based on available data for aggregate banking system.
Sources: National authorities, IMF, Moody's Investors Service

We assess banking sector risk as “baa” to reflect ample liquid assets at banks both in US dollars and pesos, which provide a buffer to
funding and foreign-currency risks. Despite bank funding being mostly denominated in local currency, foreign-currency deposits have
been historically susceptible to outflows in times of financial and exchange rate volatility, which fuels banks’ funding risks. The score
also incorporates the relatively small size of the banking system (total domestic bank assets were just 31% of GDP in 2019) and limited
refinancing risks.

Argentine banks are funded primarily by deposits, which constituted 84% of total liabilities as of March 2020, sourced mostly from
retail customers and companies. More than 70% of funding comes from deposits, 60% of which are relatively cheap demand deposits
and savings accounts, while term deposits account for the remainder.

Banks have limited reliance on cross-border funding, which reduces their exposure to foreign exchange and interest rate volatility. In
addition, the deposit base is mostly denominated in local currency (foreign-currency deposits represent 20% of the total). Substantial
deterioration of investor confidence led to a sharp drop in banks’ foreign-currency deposits over the last year, while local-currency
deposits have continued to surge, aided by increasing capital controls. Foreign-currency deposit withdrawals eased over the last few
months, although the declining trend was resumed in late September as the announcement of more strict capital controls negatively
affected investor confidence. Foreign-currency deposits totaled about $17 billion in July 2020, down about 50% over the year prior (see
Exhibit 18), its sharpest decline since the 2001-02 crisis.

Despite pressure on foreign-currency deposits, Argentine banks have continued to maintain extraordinarily high levels of liquidity, both
in foreign and local currency. Liquid assets represent more than 70% of deposits on average, which has allowed banks to withstand
significant bouts of foreign-currency deposit withdrawals. Banks have been building up liquidity buffers since May 2018, due to
increased reserve requirements established by the central bank and the sharp decrease in their loan books.

As such, liquidity remains ample in both pesos and US dollars, as reflected in banks´ modest loan-to-deposit (LTD) ratios in both
currencies. The overall LTD ratio declined to 47% as of July, the lowest in the region by far, while the foreign-currency ratio reached
32% as banks sought to protect their liquidity in case of larger deposit withdrawals. Despite banks' ample liquidity buffers, most liquid
assets are either directly or indirectly related to the sovereign. Liquid assets in pesos are largely invested in central bank notes and, to
a lesser extent, in government securities, while most liquid US dollar assets consist of deposits at the central bank and other financial
institutions.

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Delinquencies have risen in all segments from modest levels since 2018, but banks have maintained adequate capital and reserve
coverage to absorb losses. The pandemic-driven economic downturn, however, will likely drive a further deterioration in their asset
quality going forward and they will likely need to build additional provisions. Nonperforming loans stood at about 3.6% in June 2020,
down from a peak of 4.9% in February. However, the reduction was driven by extensive loan tenor extensions offered by banks to
sectors affected by the pandemic – both mandatory and discretional – and regulatory changes in the recognition of problem loans,
which weakens the delinquency ratio's use in indicating underlying credit quality. Loan loss provisions have increased since 2019 and
the trend will likely continue through year-end 2020 (see Exhibit 19).
Exhibit 18 Exhibit 19
Dollar deposit flight has eased with the imposition of capital NPLs and loan loss provisions are rising
controls Private bank NPLs to the nonfinancial private sector and provisions, %
Private sector deposits by currency, ARS and US$ billions
Peso deposits (ARS billions) USD deposits ($ billions RHS) NPLs Provisions/NPLs (right axis)
5,000 $35 6.0% 175%
4,500
$30 5.0% 150%
4,000
3,500 $25 125%
4.0%
3,000
$20 100%
2,500 3.0%
$15 75%
2,000
2.0%
1,500 $10 50%
1,000
$5 1.0% 25%
500
0 $0 0.0% 0%

Sources: Central Bank of Argentina and Moody's Investors Service Sources: Central Bank of Argentina and Moody's Investors Service

External vulnerability risk score: caa

Exhibit 20
Peer comparison table factor 4d: External vulnerability risk

Argentina caa Median Lebanon Mozambique Zambia Barbados Cuba Laos


Ca/STA C/NOO Caa2/STA Ca/STA Caa1/STA Caa2/STA Caa2/NEG
Final score caa ca caa caa b b b
Initial score caa ca caa caa b b b
Current account balance (% of GDP) -0.9 -0.9 -23.2 -19.8 1.0 -1.7 2.5 -4.5
Net IIP (% of GDP)[1] 0.4 -120.8 -- -375.5 -120.8 -- -- --
External debt (% of current account receipts) 316.1 316.1 363.5 330.2 269.6 81.3 193.5 233.5
External vulnerability indicator (EVI)[2] 276.1 272.3 128.1 38.1 272.3 75.3 -- 262.8
[1] Net international investment position (% of GDP).
[2] (Short-term external debt + currently maturing long-term debt + total nonresident deposits over one year)/official foreign exchange reserves.
Sources: National authorities, IMF, Moody's Investors Service

We set external vulnerability risk at “caa” to reflect a materially weakened reserve buffer and the fact that a large proportion of the
sovereign's foreign exchange reserves are borrowed, which limits the extent of Argentina's buffer in the event of another currency crisis
or liquidity constraints that reduce the sovereign's ability to rollover its foreign-currency-denominated debt. Argentina's historically
high External Vulnerability Indicator (EVI), which measures the ratio of external debt payments and dollar deposits to official reserves,
has averaged around 200% since 2012, a reflection of the sovereign's comparatively high exposure to external shocks.

Argentina is highly susceptible to shifts in risk appetite due to the highly dollarized nature of the economy. Accelerated fiscal
consolidation and a deeply recessionary economic environment, made worse by the coronavirus, have driven import compression and
corrected the country's large trade imbalance, reducing its need to finance imports with short-term portfolio flows. Argentina has been
recording trade surpluses since early 2019, a strong reversal from the deep trade imbalances of 2017-18, and we expect the current
account to remain in balance through 2020 despite export weakness (see Exhibits 21 and 22).

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Exhibit 21 Exhibit 22
Import compression continues during pandemic, offsetting decline Strong import compression is driving modest current account
in exports surpluses
Exports, imports and the trade balance, $US billions Current account, net FDI and basic balances, % of GDP
Trade balance (right axis) Exports Imports Current account balance Net FDI Basic balance
80 25 3%

70 20 2%

60 15 1%

50 10 0%

40 5 -1%

30 0 -2%

20 -5 -3%

10 -10 -4%

0 -15 -5%

-6%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F

Sources: INDEC and Moody's Investors Service Sources: BCRA and Moody's Investors Service

Despite the country's reduced reliance on short-term external financing relative to 2018, the highly dollarized nature of the
government's finances and the country's financial system continue to expose the sovereign to loss of foreign and domestic investor
confidence.

As a result of the country's severe financial crisis in 2001-02, Argentines have a significant amount of savings held in dollar deposits,
which are prone to fleeing the banking system and pressuring foreign exchange reserves during times of financial and exchange rate
volatility. About half of dollar deposits have been withdrawn from Argentina's banking system since last year's PASO election, which
has been a significant driver in the decline in foreign exchange reserves. In September 2019, following a month of foreign exchange
reserve losses, the central bank announced a suite of capital controls meant to ease negative pressure on the exchange rate and stem
the outflow of reserves. These have been steadily tightened over the last year, helping to stabilize total reserve levels. However, useable
reserves, which exclude an $18 billion swap with China (A1 stable) as well as foreign-currency deposits in the banking system, are much
lower (see Exhibit 23), which limits the buffer available to meet foreign-currency needs in times of financial stress.

At the same time, because of the government's high share of dollar-denominated (76%) and external debt (40%), a souring of investor
confidence can translate into a draining of foreign exchange reserves. When investors lose confidence and refuse to rollover the dollar-
denominated debt, the government is forced to pay down the principal with reserves. Indeed, Argentina is significantly more vulnerable
to a loss in investor confidence than its Latin American peers, as measured by the ratio of short-term external debt obligations to gross
foreign-currency reserves, which is well in excess of 100% (see Exhibit 24).

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Exhibit 23 Exhibit 24
Net reserves are only a fraction of total foreign exchange reserves Argentina's external financial exposure is higher than peers
Gross and net international reserves, $US billions External vulnerability indicator (EVI)*, %
Gross FX reserves Net reserves estimate Argentina Caa - Ca median
$80 400%

$70 350%

$60 300%
$50
250%
$40
200%
$30
150%
$20
100%
$10
50%
$0
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F

Sources: BCRA and Moody's Investors Service Note: EVI is the sum of short-term external debt, currently maturing long-term external
debt and total nonresident deposits as a percent of foreign exchange reserves
Sources: BCRA and Moody's Investors Service

ESG considerations
How environmental, social and governance risks inform our credit analysis of Argentina
Moody's takes account of the impact of environmental (E), social (S) and governance (G) factors when assessing sovereign issuers’
economic, institutional and fiscal strength and their susceptibility to event risk. In the case of Argentina, the materiality of ESG to the
credit profile is as follows:

As a major agricultural exporter, Argentina is moderately exposed to environmental risks. Agricultural exports, which represent
over 50% of total exports, are vulnerable to regular climate-related shocks. In 2018, a major drought was a key factor in that year’s
economic crisis, reducing export earnings and contributing to a 2.5% contraction in economic activity.

Social risks also inform our assessment of Argentina’s credit profile. Argentina has a long history of social protests leading to abrupt
policy changes, and the current economic crisis could exacerbate those trends. The economic and employment impact of the
coronavirus crisis, which will be substantial and coming after two consecutive years of economic recession, will further raise the risks
of social protests and political turmoil. We also regard the coronavirus outbreak to be a social risk under our ESG framework, given the
substantial implications for public health and safety.

In terms of governance, Argentina’s weak institutional framework is underpinned by a history of unpredictable and unsustainable
policymaking. Our analysis also incorporates the country’s track record of default and limited success in controlling high inflation.

All of these considerations are further discussed in the “Credit profile” section above. Our approach to ESG is explained in our report on
how ESG risks influence sovereign credit profiles and our cross-sector methodology General Principles for Assessing ESG Risks.

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Scorecard-indicated outcome
Combining the scores for individual factors provides the scorecard-indicated outcome. While the information used to determine the grid mapping is mainly historical, our ratings
incorporate expectations around future metrics and risk developments that may differ from the ones implied by the scorecard-indicated outcome. Thus, the rating process is
deliberative and not mechanical, meaning that it depends on peer comparisons and should leave room for exceptional risk factors to be taken into account that may result in an
assigned rating outside the scorecard-indicated outcome. For more information please see our Sovereign Ratings Methodology.

Exhibit 25
Argentina's rating metrics

Economic How strong is the economic structure?


strength
Sub-factors: growth dynamics, scale of the economy, wealth
baa1
baa2
baa3

caa1
caa2
caa3
aaa
aa1
aa2
aa3

ba1
ba2
ba3
a1
a2
a3

b1
b2
b3

ca
+ - Economic resiliency

baa1
baa2
baa3

caa1
caa2
caa3
aaa
aa1
aa2
aa3

ba1
ba2
ba3
a1
a2
a3

b1
b2
b3

ca
Institutions How robust are the institutions and how predictable
and are the policies? + -
governance Sub-factors: quality of the institutions, policy effectiveness,
strength government default history and track record of arrears Government financial strength
baa1
baa2
baa3

baa1
baa2
baa3
caa1
caa2
caa3

caa1
caa2
caa3
aaa
aa1
aa2
aa3

ba1
ba2
ba3

aaa
aa1
aa2
aa3

ba1
ba2
ba3
a1
a2
a3

b1
b2
b3

a1
a2
a3

b1
b2
b3
ca

ca
+ - + -

Fiscal How does the debt burden compare with the


strength government's resource mobilization capacity?
Sub-factors: debt burden, debt affordability, debt trend, share of foreign
currency debt, contingent liabilities, fiscal reserves
Scorecard-
baa1
baa2
baa3

caa1
caa2
caa3
aaa
aa1
aa2
aa3

ba1
ba2
ba3
a1
a2
a3

b1
b2
b3

ca

indicated
+ - outcome:
Caa2 - C

Susceptibility What is the risk of a direct and sudden threat to debt


to event risk repayment?
Sub-factors: political risk, government liquidity risk, banking
sector risk, external vulnerability risk Assigned
rating:
aaa

baa

caa
aa

ba

ca

Ca
a

+ -

Source: Moody's Investors Service

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Comparatives
This section compares credit relevant information regarding Argentina with other sovereigns that we rate. It focuses on a comparison with sovereigns within the same rating range
and shows the relevant credit metrics and factor scores.

Argentina's large, $445 billion economy is the largest among Ca/Caa-rated sovereigns, but its flat average annual growth of 0% between 2015-24 is below that of peers and the
Ca median of 1.0%. Argentina's “caa1” institutions and governance strength is not far removed from most peers, but its chronically high inflation far exceeds that of most peers.
Argentina's fiscal strength is also weak, as demonstrated by its high debt and interest burdens.

Exhibit 26
Argentina's key peers
Latin America and
Argentina Suriname Zambia Mozambique Ecuador Belize Ca Median
Year Caribbean Median
Rating/outlook Ca/STA Caa3/NEG Ca/STA Caa2/STA Caa3/NEG Caa1/NEG Ca Ba3
Scorecard-indicated outcome Caa2 - C Caa2 - C Caa2 - C Caa2 - C B3 - Caa2 Caa1 - Caa3 Caa2 - C Ba2 - B1
Factor 1 ba3 b3 b2 b1 b1 b2 b1 ba2
Nominal GDP ($ bn) 2019 445.4 4.0 23.1 15.3 107.4 1.9 234.3 46.3
GDP per capita (PPP, Intl$) 2019 20,055 15,526 4,148 1,306 11,743 8,664 12,102 15,534
Avg. real GDP (% change) 2015 - 2024F 0.0 0.2 2.0 4.1 0.2 0.8 1.0 1.1
Volatility in real GDP growth (ppts) 2010 - 2019 4.3 3.6 2.5 2.0 2.9 1.1 3.4 1.9
Factor 2 caa1 caa1 caa1 ca caa2 b3 caa1 ba3
Quality of legislative & executive institutions Latest available b b caa ca b b b ba
Strength of civil society & judiciary Latest available ba ba b caa b ba ba ba
Fiscal policy effectiveness Latest available b caa caa ca b b b ba
Monetary & macro policy effectiveness Latest available b caa b caa b ba b ba
Gen. gov. fiscal balance (% of GDP) 2019 - 2021F -6.2 -9.8 -10.7 -4.1 -5.5 -10.6 -8.4 -5.5
Average inflation (% change) 2015 - 2024F 35.6 12.2 11.6 7.1 0.8 0.5 23.6 2.8
Volatility of inflation (ppts) 2010 - 2019 14.1 16.2 3.4 5.8 1.9 0.7 8.7 1.7
Factor 3 caa3 caa3 ca ca ba1 caa2 caa3 ba2
Gen. gov. debt (% of GDP) 2019 90.1 75.3 97.8 96.8 48.0 99.6 93.9 54.2
Gen. gov. debt (% of revenue) 2019 490.6 324.3 474.5 320.6 208.8 323.4 482.5 228.7
Gen. gov. interest payments (% of revenue) 2019 18.4 15.6 29.4 10.8 13.3 10.8 23.9 10.8
Gen. gov. interest payments (% of GDP) 2019 3.4 3.6 6.1 3.3 3.1 3.3 4.7 2.4
Factor 4 ca caa caa caa ca caa caa baa
Political risk Latest available ba ba baa a b a baa baa
Government liquidity risk Latest available ca caa caa caa ca caa caa baa
Gross borrowing requirements (% of GDP) 2020F 28.4 23.2 22.2 17.1 11.7 19.5 25.3 10.6
Banking sector risk Latest available baa ba ba ba ba ba baa baa
BSCE[1] Latest available ba3-b3 ba3-b3 caa-c caa-c caa-c caa-c ba3-b3 ba1-ba2
Total domestic bank assets (% of GDP) 2019 30.9 65.8 31.3 55.6 41.1 94.1 31.1 69.7
External vulnerability risk Latest available caa ba caa caa ba ba caa baa
Current account balance (% of GDP) 2019 -0.9 -10.3 1.0 -19.8 1.6 -9.4 0.1 -1.6
External vulnerability indicator (EVI) 2021F 276.1 113.1 272.3 38.1 812.9 32.3 274.2 62.1
External debt (% of current account receipts) 2019 316.1 154.9 269.6 330.2 180.1 108.3 292.8 125.6
Net international investment position (% of GDP) 2019 0.4 -- -120.8 -375.5 -26.1 -- -60.2 -38.4

[1] BSCE is our estimate of the risk of a Banking Sector Credit Event (BSCE), which we use for sovereigns where we have no or very limited rating coverage of a system. Otherwise, we use the Baseline Credit Assessment (BCA) for rated domestic banks,
weighted by bank assets.
Sources: National authorities, IMF, Moody's Investors Service

21 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

DATA, CHARTS AND REFERENCES


Chart pack: Argentina
Exhibit 27 Exhibit 28
Economic growth Investment and saving
Real GDP volatility, t-9 to t (ppts) (RHS) Gross investment/GDP Gross domestic saving/GDP
Real GDP (% change) (LHS) 25
15.0 8.0

7.0
10.0 20
6.0
5.0
5.0
15
0.0 4.0

3.0
-5.0 10
2.0
-10.0
1.0 5
-15.0 0.0
2012

2020F

2021F
2010

2011

2013

2014

2015

2016

2017

2018

2019

2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
Sources: INDEC, Moody's Investors Service

Sources: BCRA, Moody's Investors Service

Exhibit 29 Exhibit 30
National income Population
GDP per capita ($) GDP per capita (PPP basis, $) Population (Mil.) (LHS) Population growth (% change) (RHS)
25000 47.0 1.80

46.0 1.60
20000 45.0 1.40

44.0 1.20
15000
43.0 1.00

42.0 0.80
10000
41.0 0.60

5000 40.0 0.40

39.0 0.20

0 38.0 0.00
2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
Sources: IMF, Moody's Investors Service Sources: IMF, Moody's Investors Service

Exhibit 31 Exhibit 32
Global Competitiveness Index Inflation and inflation volatility
Rank 83 out of 141 countries
Inflation rate volatility, t-9 to t (ppts) (RHS)
Barbados (Caa1/STA) Inflation rate (CPI, % change Dec/Dec) (LHS)
70.0 18.0

Argentina (Ca/STA) 16.0


60.0
14.0
50.0
Lebanon (C/NOO) 12.0
40.0 10.0

Ecuador (Caa3/NEG) 30.0 8.0


6.0
20.0
Zambia (Ca/STA) 4.0
10.0
2.0
Mozambique (Caa2/STA) 0.0 0.0
2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

0 20 40 60 80 100 120 140 160

Sources: World Economic Forum Sources: INDEC, BCRA, Moody's Investors Service

22 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Exhibit 33 Exhibit 34
Institutional framework and effectiveness Debt burden
Government Effectiveness[1] Rule of Law[1] Gen. gov. debt/GDP (%) (LHS)
Control of Corruption[1] Voice & Accountability[1] Gen. gov. debt/gen. gov. revenue (%) (RHS)
Regulatory Quality[1] 120 700
0.8
100 600
0.6
0.4 500
80
0.2
400
0.0
60
-0.2 300
-0.4 40
200
-0.6
-0.8 20 100
-1.0
0 0
-1.2

2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
2009

2010

2011

2012

2013

2014

2015

2016

2017

2018
Notes: [1] Composite index with values from about -2.50 to 2.50: higher values Sources: Ministerio de Hacienda y Finanzas Públicas, Moody's Investors Service
correspond to better governance.
Sources: Worldwide Governance Indicators

Exhibit 35 Exhibit 36
Debt affordability Financial balance
Gen. gov. interest payment/GDP (%) (LHS) Gen. gov. financial balance/GDP (%)
Gen. gov. interest payment/gen. gov. revenue (%) (RHS) Gen. gov. primary balance/GDP (%)
4.0 20.0 4

3.5 18.0
2
16.0
3.0
14.0 0
2.5 12.0 -2
2.0 10.0
8.0 -4
1.5
6.0 -6
1.0
4.0
0.5 -8
2.0
0.0 0.0 -10
2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
Sources: Ministerio de Hacienda y Finanzas Públicas, Moody's Investors Service Sources: Ministerio de Hacienda y Finanzas Públicas, Moody's Investors Service

Exhibit 37 Exhibit 38
Government liquidity risk External vulnerability risk
Gen. gov. debt/GDP (%) (RHS) External debt/CA receipts (%)(LHS)
Gen. gov. external debt/total gen. gov. debt (%) (LHS) External vulnerability indicator (%)(RHS)
50 120 500 400
45 450 350
100
40 400
300
35 350
80
30 300 250

25 60 250 200
20 200 150
40 150
15
100
10 100
20
50 50
5
0 0 0 0
2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
2020F

2021F
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Sources: BCRA, Moody's Investors Service Source: Moody's Investors Service

23 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Rating history

Exhibit 39
Argentina[1]
Long Term Ratings Outlook Review Action Short Term Ratings Action Date

Foreign Local Foreign Local Foreign Local


Currency Currency Currency Currency Currency Currency

Ca Ca STA - - - NP Sep-20
Ca Ca NEG - - - NP Apr-20
Caa2 Caa2 RUR Possible Downgrade Possible Downgrade - NP Aug-19
B2 B2 NEG - - - NP Jul-19
B2 B2 STA - - - NP Nov-17
B3 B3 POS - - - NP Mar-17
B3 B3 STA - - - NP Apr-16
Caa1 Caa1 POS - - - NP Nov-15
Caa1 Caa1 STA - - - NP Nov-15
Caa1 Caa1 NEG - - - NP Jul-14
Caa1 Caa1 STA - - - NP Mar-14
B3 B3 NEG - - - NP Sep-12
B3 B3 STA - - - NP Aug-08
B3 B3 POS - - - NP Jan-07
B3 B3 STA - - - NP Jun-05
Caa1 B3 STA - - - NP Nov-03
Caa1 B3 - - - - NP Aug-03
Ca Ca - - - - NP Dec-01
Caa3 Caa3 - Confirmed Confirmed - NP Dec-01
Caa3 Caa3 - - - - NP Oct-01
Caa1 Caa1 - - - - NP Jul-01
B3 B3 - Possible Downgrade Possible Downgrade - NP Jul-01
B2 B2 - Confirmed Confirmed - NP Jun-01
B2 B2 - Possible Downgrade Possible Downgrade - NP Mar-01
B1 B1 - - - - NP Oct-99
Ba3 Ba3 - Possible Downgrade Possible Downgrade - NP Aug-99
Ba3 Ba3 - Confirmed Confirmed - NP Feb-99
Ba3 Ba3 - Possible Downgrade Possible Downgrade - NP Sep-98
Ba3 Ba3 - - - - NP Oct-97
B1 B1 - - - - NP Jan-97
B1 - - Confirmed - - - Sep-95
B1 - - Possible Upgrade - - - May-95
B1 - - - - - - Jul-92
B3 - - - - - - May-89
B2 - - - - - - Dec-87
Ba3 - - - - - - Nov-86

Notes: [1] Table excludes rating affirmations and ceilings. Please visit the issuer page for Argentina for the full rating history.
Source: Moody's Investors Service

24 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Annual statistics

Exhibit 40
Argentina
2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021F
Economic structure and performance
Nominal GDP (US$ bil.) 426.5 530.2 581.4 613.3 567.1 644.9 557.5 643.6 517.6 445.4 394.0 394.5
Population (Mil.) 40.8 41.3 41.7 42.2 42.7 43.1 43.6 44.1 44.6 45.1 45.6 46.1
GDP per capita (US$) 10,456 12,849 13,932 14,533 13,289 14,952 12,790 14,604 11,616 9,887 8,650 8,565
GDP per capita (PPP basis, US$) 18,525 19,817 19,764 20,366 20,000 20,538 20,105 20,800 20,551 20,055 -- --
Nominal GDP (% change, local currency) 33.2 31.1 21.1 26.9 36.8 30.0 38.2 29.6 36.4 47.5 33.0 45.2
Real GDP (% change) 10.1 6.0 -1.0 2.4 -2.5 2.7 -2.1 2.8 -2.6 -2.1 -12.0 5.2
Inflation (CPI, % change Dec/Dec)[1] 10.9 9.5 10.8 10.9 23.9 30.0 27.1 24.8 47.6 57.3 45.0 40.0
Gross investment/GDP 17.7 18.4 16.5 17.3 17.3 17.1 17.7 18.2 16.0 14.6 14.0 14.3
Gross domestic saving/GDP 20.6 20.1 18.5 17.2 17.7 16.0 16.6 15.6 17.8 19.6 20.5 21.5
Nominal exports of G & S (% change, US$ basis) 22.7 21.1 -3.5 -5.0 -8.9 -15.5 1.2 4.3 3.9 2.7 -9.3 5.4
Nominal imports of G & S (% change, US$ basis) 40.3 29.9 -6.5 8.6 -12.0 -4.3 -0.4 18.9 -4.7 -21.1 -16.3 5.9
Openness of the economy[2] 35.0 35.2 30.5 29.3 28.4 22.5 26.1 25.3 31.2 32.6 32.3 34.0
Government Effectiveness[3] -0.2 -0.1 -0.2 -0.3 -0.2 -0.1 0.2 0.1 0.0 -- -- --
Government finance
Gen. gov. revenue/GDP[4][5] 21.1 20.0 20.9 21.4 22.3 22.2 19.8 18.7 17.9 18.4 16.5 17.1
Gen. gov. expenditures/GDP[4][5] 20.9 21.4 23.0 23.4 24.7 26.0 25.6 24.6 23.1 22.2 25.2 23.2
Gen. gov. financial balance/GDP[4][5] 0.2 -1.4 -2.1 -1.9 -2.4 -3.8 -5.8 -5.9 -5.2 -3.8 -8.8 -6.0
Gen. gov. primary balance/GDP[4][5] 1.5 0.2 -0.2 -0.7 -0.8 -1.8 -4.2 -3.8 -2.6 -0.4 -7.4 -4.7
Gen. gov. debt (US$ bil.)[4] 181.6 197.2 216.9 223.4 239.3 240.7 275.4 320.9 332.2 323.1 320.0 315.0
Gen. gov. debt/GDP 43.2 38.8 40.3 43.4 44.5 52.9 53.2 56.0 85.9 90.1 95.4 95.1
Gen. gov. debt/gen. gov. revenue[4] 205.0 194.2 193.0 202.3 199.0 238.3 268.8 298.8 480.3 490.6 578.7 554.6
Gen. gov. interest payments/gen. gov. revenue[4][5] 6.3 8.2 9.3 5.9 7.0 9.1 8.1 11.3 15.0 18.4 8.5 7.7
Gen. gov. FC & FC-indexed debt/gen. gov. debt[4] 53.2 54.5 53.7 56.2 60.1 66.9 67.4 68.5 76.2 77.7 78.0 78.0
Source: Moody's Investors Service

25 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Exhibit 41
Argentina
2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019F 2020F
External payments and debt
Nominal exchange rate (local currency per US$, Dec) 3.8 4.0 4.3 4.9 6.5 8.5 13.1 15.9 18.6 37.6 60.0 80.0
Real eff. exchange rate (% change) -1.2 -0.8 -4.7 6.4 -4.9 -12.6 18.8 -28.6 -6.0 -31.9 -- --
Current account balance (US$ bil.) 7.3 -1.6 -5.3 -2.1 -13.1 -9.2 -17.6 -15.1 -31.6 -27.5 -8.7 -6.2
Current account balance/GDP 2.2 -0.4 -1.0 -0.4 -2.1 -1.6 -2.7 -2.7 -4.9 -5.3 -2.0 -1.5
External debt (US$ bil.) 149.4 144.7 156.3 156.5 155.5 158.7 167.4 181.4 234.5 277.9 300.0 325.0
Public external debt/total external debt 65.6 61.3 59.3 58.7 58.8 61.9 60.7 67.3 68.8 71.0 74.0 75.0
Short-term external debt/total external debt 19.9 21.0 25.7 24.2 24.0 18.2 32.4 20.0 22.9 23.7 21.7 23.7
External debt/GDP 44.4 33.9 29.5 26.9 25.4 28.0 26.0 32.5 36.5 53.5 69.1 78.1
External debt/CA receipts[6] 206.8 167.6 151.0 158.0 163.8 181.6 223.4 235.5 293.2 324.7 480.9 604.9
Interest paid on external debt (US$ bil.) 3.6 4.0 3.9 3.8 4.4 7.3 9.9 14.6 17.0 13.0 13.7 14.5
Amortization paid on external debt (US$ bil.) 11.5 11.9 12.6 10.6 14.0 10.3 15.4 13.0 15.7 25.0 27.5 29.7
Net foreign direct investment/GDP 1.0 2.4 1.8 2.5 1.5 0.6 1.7 0.3 1.6 1.9 1.0 1.5
Net international investment position/GDP 3.3 2.2 2.1 2.0 1.5 1.1 0.7 0.5 0.1 0.3 -- --
Official forex reserves (US$ bil.) 42.9 46.6 40.1 36.8 25.0 26.0 20.6 33.6 50.1 59.2 45.0 40.0
Net foreign assets of domestic banks (US$ bil.) -0.4 -0.1 -1.1 0.6 -0.2 -0.1 -0.1 2.1 -0.7 -0.5 -- --
Monetary, external vulnerability and liquidity indicators
M2 (% change Dec/Dec) 13.6 28.1 28.9 40.1 27.1 29.8 37.0 19.1 30.9 16.1 -- --
Monetary policy rate (% per annum, Dec 31)[5] 11.6 9.2 10.7 12.0 14.9 20.4 21.2 24.8 28.8 59.3 -- --
Domestic credit (% change Dec/Dec) 27.7 31.4 36.7 40.1 37.8 42.7 53.1 29.2 32.3 20.0 -- --
Domestic credit/GDP 25.2 24.9 26.0 30.1 32.6 34.1 40.1 37.5 38.3 33.5 -- --
M2/official forex reserves (X) 1.2 1.4 1.9 2.5 3.6 3.4 3.8 2.3 1.7 0.8 -- --
Total external debt/official forex reserves 348.0 310.3 390.0 425.6 622.4 609.6 813.8 540.6 468.1 469.2 666.7 548.6
Debt service ratio[7] 20.9 18.4 15.9 14.5 19.4 20.0 33.7 35.9 40.8 44.4 66.1 82.3
External vulnerability indicator (EVI)[8] 114.0 112.8 108.0 141.6 153.3 206.7 187.5 356.8 182.1 176.7 168.8 222.6
Liquidity ratio[9] 35.0 36.9 49.1 37.7 32.7 31.9 43.3 49.3 73.3 76.4 -- --
Total liabilities due BIS banks/total assets held in BIS banks 50.9 56.1 65.5 52.6 44.9 47.1 59.8 52.4 101.2 114.6 -- --
"Dollarization" ratio[10] 22.1 25.1 16.4 10.8 9.4 10.5 16.0 31.9 36.7 55.8 -- --
"Dollarization" vulnerability indicator[11] 25.7 32.6 31.2 24.8 31.5 32.0 50.6 62.1 55.2 53.7 -- --

[1] Series break in 2014


[2] Sum of Exports and Imports of Goods and Services/GDP
[3] Composite index with values from about -2.50 to 2.50: higher values suggest greater maturity and responsiveness of government institutions
[4] Central Government
[5] Series break in 2016
[6] Current Account Receipts
[7] (Interest + Current-Year Repayment of Principal)/Current Account Receipts
[8] (Short-Term External Debt + Currently Maturing Long-Term External Debt + Total Nonresident Deposits Over One Year)/Official Foreign Exchange Reserves
[9] Liabilities to BIS Banks Falling Due Within One Year/Total Assets Held in BIS Banks
[10] Total Foreign Currency Deposits in the Domestic Banking System/Total Deposits in the Domestic Banking System
[11] Total Foreign Currency Deposits in the Domestic Banking System/(Official Foreign Exchange Reserves + Foreign Assets of Domestic Banks)
Source: Moody's Investors Service

26 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

Moody’s related publications

» Rating Action: Moody's affirms Argentina's Ca rating, changes outlook to stable, 28 September 2020

» Credit Opinion: Government of Argentina - Ca stable: Update following rating affirmation, outlook changed to stable from
negative, 28 September 2020

» Outlook: Global Macro Outlook 2020-21 (August 2020 Update): Economic recovery remains tenuous as pandemic fears persist, 25
August 2020

» Credit Opinion: Government of Argentina - Ca negative: Update following forecast change, 29 April 2020

» Rating Action: Moody's downgrades Argentina to Ca, changes outlook to negative, 3 April 2020

» Credit Opinion: Government of Argentina - Ca negative: Update following downgrade to Ca, outlook negative, 3 April 2020

» Country Statistics: Argentina, Government of, 11 September 2020

» Rating Methodology: Sovereign Ratings Methodology, 25 November 2019

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All
research may not be available to all clients.

Related websites and information sources

» Sovereign risk group web page

» Sovereign ratings list

» The Central Bank's website: www.bcra.gob.ar

» The Ministry of Economics and Public Finance's website: www.economia.gob.ar

MOODY’S has provided links or references to third party World Wide Websites or URLs (“Links or References”) solely for your convenience in locating related information and services.
The websites reached through these Links or References have not necessarily been reviewed by MOODY’S, and are maintained by a third party over which MOODY’S exercises no control.
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any third party web site accessed via a Link or Reference. Moreover, a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided
by any third party.

27 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis


MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL

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REPORT NUMBER 1246281

28 14 October 2020 Government of Argentina – Ca stable: Annual credit analysis

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