1. October 28, 2011 Analyst: Daniel Kerner Contact info kerner@eurasiagroup.net CFK2 and Foreign Investors

2. Prepared for Relations with foreign investors have been difficult Argentina is, by most measures, an economic success story High growth, fiscal and trade surplus, manageable debt dynamics Inflation high, but stable And yet, investors do not like Argentina, especially since 2007 FDI remains relatively low, while spreads remain high 1

3. Prepared for Why is that? Inheritance: default, restructuring, pesification Government’s tough stance vis- à-vis the private sector Reluctance to allow utility prices to increase Manipulation of official statistics Unwillingness to address distortions Increasingly arbitrary and unpredictable policy style 2

4. Prepared for Will this change? Main question is whether the government will become more moderate or radical In contrast to 2007, expectations are low Economic policy is unlikely to change, but radicalization is unlikely Electoral victory will reinforce sense that policy direction is appropriate Reluctance to adjust in the face of an uncertain global outlook Government will continue to maximize short-term economic growth and avoid paying political costs 3

5. Prepared for Main challenges Inflation: stable, but high Fiscal accounts: subsidies challenge fiscal solvency Deteriorating external accounts; pressures on the currency are rising Lack of investment in the energy sector 4

6. Prepared for Time is of the essence If the government does not make the needed adjustments, these problems will worsen An increasingly interventionist stance would further erode confidence Hard to tell how sustainable the “model” is, but room to maneuver is declining But adjustments are manageable So government could surprise investors positively 5

7. Eurasia Group is the world’s leading global political risk research and consulting firm. This presentation is intended solely for internal use by the recipient and is based on the opinions of Eurasia Group analysts and various in-country specialists. This presentation is not intended to serve as investment advice, and it makes no representations concerning the credit worthiness of any company. This presentation does not constitute an offer, or an invitation to offer, or a recommendation to enter into any transaction. Eurasia Group maintains no affiliations with government or political parties. © 2011 Eurasia Group, 475 Fifth Avenue, 14 th floor, New York, New York 10017 www.eurasiagroup.net 6