The document provides an overview of Argentina including its geography, climate, population, government and politics, and economy. Some key points: - Argentina has a population of around 40 million people and a land area of over 2.7 million square kilometers including fertile plains and mountainous regions. - It has a democratic federal republic government with a president and bicameral legislature. Political stability has increased in recent years. - The economy grew strongly from 2003-2007 after a major crisis in 2001-2002 but high inflation remains a challenge. The balance of payments has improved since 1998. - Both strengths like natural resources and recent growth, and weaknesses like a history of financial crises and high inequality

1. CRA Assessment- Argentina
Global Business Environment/ Session: 1
Country Risk Analysis - Argentina
Submitted by :
Bhaskar Tripathi

2. Contents
Global Business Environment/ Session: 1
 Overview
 Political analysis
 Economy analysis
 Balance of Payment
 Risk analysis
 Strengths & Weaknesses

3. Overview
Global Business Environment/ Session: 1
• Area: total: 2,766,890 sq km ; land: 2,736,690 sq km ;water: 30,200 sq km.
• Coastline: 4,989 km.
• Climate: mostly temperate; arid in southeast; subantarctic in southwest.
• Terrain: Rich plains of the Pampas in northern half, flat to rolling plateau of
Patagonia in south, rugged Andes along western border.
• Natural resources: Fertile plains of the pampas, lead, zinc, tin, copper, iron ore,
manganese, petroleum, uranium.
• Land use: Arable land: 10.03% , permanent crops: 0.36% , other: 89.61% (2005).
• Irrigated land: 15,500 sq km (2003).
• Population: 39,921,833 (July 2006 est.)
• Age structure:
0-14 years: 25.2% (male 5,153,164/female 4,921,625)
15-64 years: 64.1% (male 12,804,376/female 12,798,731)
65 years and over: 10.6% (male 1,740,118/female 2,503,819) (2006 est.)

4. Overview (contd..)
Global Business Environment/ Session: 1
• Literacy: definition: age 15 and over can read and write
total population: 97.1%
male: 97.1%
female: 97.1% (2003 est.)
• Languages: Spanish (official), English, Italian, German, French.
• Natural resources: Fertile plains of the pampas, lead, zinc, tin, copper, iron ore,
manganese, petroleum, uranium
• Natural hazards: San Miguel de Tucuman and Mendoza areas in the Andes subject
to earthquakes; pampers are violent windstorms that can strike the pampas and
northeast; heavy flooding
• Environment - current issues: environmental problems (urban and rural) typical of
an industrializing economy such as deforestation, soil degradation, desertification,
air pollution, and water pollution
Note: Argentina is a world leader in setting voluntary greenhouse gas targets

5. Argentina History
Global Business Environment/ Session: 1
Argentina’s population and culture are heavily shaped by immigrants from
throughout Europe, but most particularly Italy and Spain, which provided the
largest percentage of newcomers from 1860 to 1930.
After a long period of internal struggle Democracy returned to Argentina in 1983,
and has persisted despite numerous challenges, the most formidable of which was
a severe economic crisis in 2001-02 that led to violent public protests and the
resignation of several interim presidents.
Successful negotiations with the IMF allowed Argentina to sidestep some fiscal
discipline measures normally imposed in such circumstances. Since 2003, the
government's efforts to stem the crisis have led to rapid economic recovery.
Argentina has a market-oriented economy with abundant natural resources.
However, high inflation has been a weakness of the Argentine economy for
decades.

6. Political Analysis - Argentina
Global Business Environment/ Session: 1

7. Politics and government of Argentina
Global Business Environment/ Session: 1
• President : Cristina Fernández de Kirchner (since December 10, 2007)
• Government type: Democracy, Presidential, Multi-party system.
• Capital: Buenos Aires.
• Constitution: 1853 Original with reforms in 1860, 1866, 1898, 1949, 1957.
• Cabinet : Cabinet of Ministers is appointed by the President.
• Political Structure :
Argentina is a federal republic formed by 23 autonomous provinces and one
autonomous city, the capital Buenos Aires. The Executive Branch is headed by a
president elected for a period of four years.
The Argentine Constitution allows for one successive re-election. Legislative power
is exercised by a bicameral legislature with a Lower Chamber (254 members
representing the people) and a Senate (72 elected Senators representing the
provinces and the autonomous capital city, 3 for each).

8. PRA – Judicial System and Law
Global Business Environment/ Session: 1
• Judiciary and Legal system:
Current legal system is based on the constitutional reforms of 1994 .
The Judiciary is independent and the highest federal court is the Supreme Court,
made up of nine judges.Each of the provinces has its own government and courts.
While substantive law is largely the same at both the federal and provincial levels,
procedure may vary in provincial courts. Under Argentina’s constitution, the
provinces delegate to the federal legislature the power to enact laws of national
scope governing civil and commercial issues, foreign relations, defence and other
matters. Federal employees mandatory retirement age of 70.
• Healthcare:
Health care is provided through a combination of employer and labor union-
sponsored plans, government insurance plans, public hospitals and clinics and
through private health insurance plans. Health care costs amount to almost 10% of
GDP. Argentina has raised life expectancy at birth from 60 years to 76 since 1948 to
2009.
• Corruption Index (In 2002 -> 2.8, In 2009 -> 3.0).

9. Elections and present government
Global Business Environment/ Session: 1
Seats by Party (2011 elections) President and vice president elected on the same
Justicialist Party
ticket by popular vote for four-year terms.
Front for Victory
Justicialist Front
Legislative power is exercised by the National
Congress, which consists of the Chamber of Deputies
Others
and the Senate
Total Kirchnerism (Left-wing peronism)
Civic and Social Agreement
The Chamber of Deputies is composed of 257
Radical Civic Union
members directly elected for a four-year term of office;
Front for Everyone nevertheless, half the seats are renewed every two
Others years.
Total Civic and Social Agreement (Radicalism center-left) Senate's 72 members are directly elected for a six-year
Republican Proposal (Liberal-conservatism and term of office, but Senate elections are held every two
years for one-third of the seats.
3%
1% 10% 9%
5%
1%
Ever since 2003 elections and the economic
1%
1%
3% policies laid by Kirchner Govt, Argentina has ended
11% its economic crisis, got fiscal and trade surpluses
19% and paid off debts with the IMF and nationalized
18% some previously privatized enterprises. The last 8
12% years have embarked a much needed present
political stability in Argentina.
2% 1% 2%

10. Political Analysis
Global Business Environment/ Session: 1
Strengths
 Since 1984, the democratic framework proved durable through severe economic crisis, despite Argentina’s long history
of dictatorship and military coups. This is remarkable for a democracy.
Political Risk Rating of Argentina is P2- on a scale of P1 (lowest risk), P2+, P2-, P3+, P3-, P4 (highest risk).
Under President Kirchners, economic policy has moved in the direction of greater state intervention and away from
economic orthodoxy.
Combined with the impressive economic growth and fiscal stability in Argentina since last 8 years, investors are likely to
maintain or boost their stake in Argentina.
Weakness
For long term, standpoint, it is unclear what polices will emerge post-election given a history of political instability in
Argentina. Argentina is highly regulated economy
Argentina's ever rising inflation rate (estimates to be 12% in 2011 and uncertainties about electricity supply are limiting
government's ability to implement necessary policy adjustments. This, in turn, might threaten Argentina's economic
recovery since 2003, and even raise doubts about political stability in the medium to long-term.
Argentina ranks 105th out of 178 countries in the Transparency International's Corruption Perceptions Index for 2010.
Reported problems include both government and private-sector corruption, the latter of which include money laundering,
trafficking in narcotics and contraband, and tax evasion. This creates skepticism for FDI and prospective investors.

11. Economy Analysis
Global Business Environment/ Session: 1
Argentina Economy - Strengths/Weakness and Risks

12. Economic overview
Global Business Environment/ Session: 1
 Summary : The economy of Argentina is third-largest in Latin America's, with a high quality of life and GDP per
capita.An upper middle-income economy, Argentina has a firm foundation for future growth for its market size, the levels
of foreign direct investment, and percentage of high-tech exports as share of total manufactured goods.
 History : Despite such a huge wealth of literate people and natural resources, Argentina's historical economic
performance has been very uneven, in which high economic growth alternated with severe recessions, particularly during
the late twentieth century, and income maldistribution and poverty increased. Early in the twentieth century it was one of
the richest countries in the world and the richest in the Southern hemisphere, though it is now an upper-middle income
country.
 Stagflation : Record foreign debt interest payments, tax evasion and capital flight resulted in a balance of payments
crisis that plagued Argentina with severe stagflation from 1975 to 1990.
2001 Economic Crisis : In 2001,Argentine economy suffered its sharpest decline since 1930; by 2002, Argentina had
defaulted on its debt, its GDP had shrunk, unemployment reached 25% and the peso had depreciated 70% after being
devalued and floated.A rgentine debt restructuring offers in 2005 and 2010 resumed payments on the majority of its
almost $100 billion in defaulted bonds from 2001.
Economic Recover since 2003 :
Expansionary policies and commodity exports triggered a rebound in GDP from 2003 onwards. This trend has been largely
maintained, creating millions of jobs and encouraging internal consumption. The socio-economic situation has been
steadily improving and the economy grew around 9% annually for five consecutive years between 2003 and 2007, and 7%
in 2008. The global recession of 2007–10 affected the economy in 2009, with growth slowing to 0.8%.High economic
growth resumed, and GDP expanded by around 9% in both 2010 and 2011

13. Argentine Economic Structure Parameters
Global Business Environment/ Session: 1

14. Argentina Economy - Basic Indicators
Global Business Environment/ Session: 1
 Expected growth in 2011 is well above the average of the past ten years.

15. Argentina Economy - Basic Indicators
Global Business Environment/ Session: 1

16. Argentina Economy - Basic Indicators
Global Business Environment/ Session: 1

17. Argentina - Country Risk Assesment
Global Business Environment/ Session: 1

18. Credit Rating
Global Business Environment/ Session: 1
Latin America’s Credit Rating Comparison
Standard & Poor's Ratings:
AAA: The best quality borrowers, reliable and stable
AA: Quality borrowers, a bit higher risk than AAA
A: Economic situation can affect finance
BBB: Medium class borrowers, which are satisfactory at the moment
BB: More prone to changes in the economy
B: Financial situation varies noticeably

19. Argentina – Balance of Payment
Global Business Environment/ Session: 1
Balance of payment has improved since 1998 signifying improved cash flow.

20. Risk Analysis
Global Business Environment/ Session: 1
Argentina– Risk Strengths/ Weaknesses and Risk Analysis

21. Risk Assesment - Strengths
Global Business Environment/ Session: 1
Strengths
Relatively stable credit Rating : B. Source : (S&P – March 2012)
Fiscal and monetary policy has been prudent and pragmatic since last 5 years.
Domestic market potential, natural resources and low labour costs have continued to attract
foreign investors.
The democratic framework proved durable through severe economic crisis (2001),
notwithstanding Argentina’s long history of dictatorship and military coups.
External debt restructuring on sustainable terms and moderate debt ratios.
Strong external liquidity position.
The socio-economic situation has steadily improved GDP growth expanded by around 9% in both
2010 and 2011 which will build investor confidence.
Political stability seems to have returned to Argentina and with people’s needs getting satiated by
the state there are low chances of instability.

22. Risk Assesment - Weaknesses
Global Business Environment/ Session: 1
Weakness
Although restructuring of its bond debt has allowed Argentina to sharply reduce its foreign debt, it
still has very high debt ratios and substantial financing needs.In addition, it cannot remain isolated
by Global recession.
Poor long-term growth record and history of financial crises.
External debt restructuring not fully concluded.
Over dependence on high commodity prices.
Accelerating inflation and lack of credibility of official inflation data. Unofficially, the inflation of
Argentina could be as high as 24%. [source : click here]
Lack of access to international finance.
Adequate but below average Structural Business Environment.
Gini Index (2009- World Bank) for Argentina was 46, indicating high inequality of income.

23. Overall Risk Assessment
Global Business Environment/ Session: 1
Economic Stability
 Short term financial flow indicators also do not point to an imminent crisis.
However, the in past frequently disastrous economic policies and political instability have led to
volatile growth over an extended period, oscillating between boom and bust, despite a rich gift of
agricultural resources. Overall Argentina is projected to ameliorate its power in Latin America with a
positive investor mood. Change of approach of the current government is needed to overcome the
lacks access to international finance and prevent financial isolation from the world.
Social & Political stability Economic growth prospects Domestic financial stability
External Liquidity Inflation Balance Of Payment (BOP)

24. Data Sources
Global Business Environment/ Session: 1
Central Intelligence Agency (CIA)
 Euro Monitor
 Latin America Monitor
 World Bank
 The Institute of International Finance (IIF)
 International Monetary Fund (IMF)
 Latin Business Chronicle
 UNDP
 Rating & Investment Information
 Standard & Poor’s
 Transparency International
 Euler Herms
 Google Scholars

25. The End
Global Business Environment/ Session: 1