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Significance
Faced with long-term fiscal imbalances, provincial governments took advantage of the reopening of global markets following Argentina's 2016 debt deal to finance their expenditures. However, the ‘sudden stop’ of capital inflows in 2018, the 2018-19 recession and the impact of the COVID-19 pandemic sent provincial economies into crisis.
Impacts
New provincial bonds will perform no better until the federal government reaches a deal with the IMF stipulating new fiscal goals.
With few options to raise local revenues, debt agreements are needed for provinces to regain access to new lending.
With federal bailouts set to end, more realistic conditions for sub-national debt are needed for longer-term sustainability.
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2020
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