Argentina's Successful Market Restructuring

The Economist reports that Argentina has managed to persuade 80% of its bondholders to accept "a deeply discounted" repayment plan. Under this plan, only 30 cents are repayed on every dollar. In addition to this good news, Argentina is recovering much quicker than anticipated. Much of this can be attributed to the complete institutional revamping undertaken by the government. An aspect of this reform is the replacement of the peso by the dollar. As a result, the Argentina's GDP grew by 8.8% in 2003 and 2004 (only two years after the economic collapse). However, Argentina still faces some serious challenges. One of its biggest problems is the capital flight that occured; Argentinian citizens hold almost $150 billion in foreign markets. Regardless of these problems Argentina's restructuring is by and large a success story: only three years after its dramatic default, it is already rated a B- debtor.