6 May 2018 Argentina's central bank has continued to raise interest rates in an attempt to stop the slide of the peso in international currency markets. In the last week, the interest rate has moved from 27.25% to 33.25% on Wednesday, before reaching 40% on Friday. The peso has lost a quarter of its value over the past year, but analysts warn that the crisis is escalating and is likely to continue In 2017, inflation was at 25% in Argentina and the central bank has set a target of 15% which it claims it will take action to enforce. President Macri’s government claims it is trying to reverse the protectionist policies of his predecessor Ms de Kirchner. Under the presidency of Cristina Fernandez de Kirchner, government spending was high. Edward Glossop, Latin America economist at Capital Economics, told the BBC, "This crisis looks set to continue unless the government steps in to reassure investors that it will take more aggressive steps to fix Argentina's economic vulnerabilities". "Risks to the peso have been brewing for a while - large twin budget and current account deficits, a heavy dollar debt burden, entrenched high inflation and an overvalued currency. "The real surprise is how quickly and suddenly things seem to be escalating." Mr Glossop warned that the fiscal tightening planned for this year would have to come earlier and be more intense to avoid the need for more economic adjustments.
Questions What has happened to the peso in the last year? How does Mr Macri’s government differ from Ms de Kirchner’s? What are the key risks to Argentina’s economy?
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Vocabulary Can you use these words or phrases in a sentence about your company or country? Highlight text for definitions
in an attempt to – trying to (note the two prepositions in use) moved from … to … on – (again note the combination of prepositions) to escalate – to increase even more protectionist – tending towards trade barriers predecessor – person who did the job before to step in – to intervene, to become involved in to reassure – to make someone feel better about a situation a vulnerability – an area of weakness has been brewing – has been developing (idiomatic – we also brew beer) entrenched – fixed, difficult to change fiscal – related to a country’s budget fiscal tightening – decreasing government spending and borrowing
Grammar The present perfect is used in this phrase - The peso has lost a quarter of its value over the past year, … - why? Highlight below for a solution ‘In the past year’ does not mean the same as ‘last year’. It refers to a period of one year, starting 365 days ago – whereas ‘last year’ means 2017 (this year) and is clearly finished; therefore, the past simple would be used with ‘last year’, but ‘in the last/past year’ refers to a period that includes the present so it will take the present perfect. More past form grammar click here ...