ABSTRACT
The modifications demanded by the payment of interest on the foreign debt present insurmountable problems for the formulation of economic policies in Argentina. A reduction in military expenditure could contribute up to 4 per cent of Gross domestic product (GDP), making this move essential, whatever economic policy is adopted. The minimum level of public investment required to complete the public works programme already begun is at least 7 per cent of GDP, so that reducing expenditure in this area could not contribute more than 2 per cent of GDP. In order to simplify our analysis, we will continue to consider only the question of how to deal with the interest payments on the foreign debt which, in 1983, reached something in the region of US$4,000 million. The import coefficient in Argentina is already low and, however wholehearted the effort at import substitution might be, imports tend to grow more quickly than GDP.
