ABSTRACT
This chapter discusses the financial reform needed to restore order to the Argentine economy and analyzes the effect of foreign-debt interest payments on the public sector and the balance of payments. It considers the public sector; two things should be borne in mind. First, that US$30,000 million out of a total foreign debt of USS 40,000 million is owed by the public sector. Secondly, that the interest payments on the foreign debt represent a substantial proportion of total public spending. The foreign-debt problem is therefore largely concentrated in the public sector and chiefly revolves around interest payments. A surplus on the account balance of payments means that the private sector is generating more funds from exports and other means than it needs for its imports and other expenditure abroad. In short, it must seek to reduce domestic consumer and investment demand to the level of the goods and services available after payment of the foreign-debt interest.
