The government has continued to demonstrate credibility through further economic adjustment and conclusion of a new Extended Fund Facility arrangement with the International Monetary Fund at the end of 1997. Despite the relatively high level of growth in recent years, double-digit unemployment rates have persisted, largely because of rigidities in Argentina's labor laws. Banking Argentina's banking system began 1998 further consolidated and strengthened by recent large foreign investments. In late 1997, shortly after the Asian financial crisis began, the Government of Argentina reassured investors that the country's banking system and reserves were strong enough to withstand the storm. Bank financing and lending costs are still high by industrialized country standards.
Credit is very expensive for certain sectors.
Easier lending for small and medium sized firms and improved credit risk management is essential to foster job creation. In late 1997, the Menem Administration announced its intention to privatize Banco de la Nacion, Argentina's largest commercial bank. Strong political opposition, however, makes the timing of this privatization uncertain. During 1998, the government initiated the privatization of the National Mortgage Bank. A key development in helping Argentina meet its external payments is the dramatic growth in Argentina's foreign trade since 1990.