Argentinian international reserves were under significant pressure until late 2015. Since then, laudable policy initiatives by the new administration of President Mauricio Macri have greatly supported the country’s liquidity. This urged Credendo Group to upgrade its short-term political risk classification to category 4 (from 5).

One important step has been the decision to allow the exchange rate of the Argentine peso to float freely. Scarce international reserves are therefore no longer depleted in an effort to support the (until recently, overvalued) exchange rate. What is more, the sharp depreciation that followed the decision – along with a substantial reduction of export tariffs – has evoked a hike in export earnings (mainly thanks to increased agricultural exports).

More important still is that Argentina recently regained access to international capital markets. This access had been impeded due to a long-standing legal battle between Argentina and some of its so-called holdout creditors: investors in government bonds that refused to reschedule their claims after the huge sovereign debt default in 2001. The fact that a negotiated outcome was finally reached, is a real game changer. Indeed, the renewed borrowing option has vastly improved Argentina’s liquidity position.