World Cup lets Argentina forget economic woes

An Argentina fan cheers during the 2014 FIFA World Cup Brazil Group F match between Argentina and Bosnia-Herzegovina at Maracana on June 15, 2014 in Rio de Janeiro, Brazil.
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Argentina's economy is shrinking and its government is in a race against time to cut a deal staving off another painful debt default, but Argentines are finding some rare joy in their soccer team's ticket to the World Cup final.

Euphoric fans partied in the boulevards of Buenos Aires late into Wednesday night, forgetting for a few hours that they teeter on the brink of a new debt crisis that risks further economic turmoil.

Many Argentines are fed up with sky-rocketing consumer prices and a depreciating currency that have eaten into savings. Almost half of all Argentines expect their personal economic situation to worsen in coming months, according to one recent poll.

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So when Maxi Rodriguez netted the winning penalty against the Netherlands on Tuesday, booking a place in the World Cup final, a weary nation yelled with joy against a backdrop of firecrackers and blaring vuvuzela horns.

"Argentina has its problems. Argentina always has its problems," said Jose-Luis Maxone after watching the game in a downtown park. "But this is a moment to forget our worries, a moment to enjoy."

Across the capital, in the upmarket Belgrano neighbourhood, thousands of fans clad in the national strip or sporting blue and white face paint gathered at a major intersection singing anthems and waving flags.

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"Everyday I love you more, oh Argentina, it's a feeling I just can't stop," went one song.

Their team plays a powerful German side in the final in Rio de Janeiro on Sunday, but Argentines are confident they can win.

Argentina has twice won the World Cup, in 1978 and 1986, and its star forward Lionel Messi is considered by many as the best player in the world.

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"The last time Argentina was this excited was when the pope was nominated. And even then we weren't this happy," beamed 18-year-old law student Sofia Petracca.

It is a far cry from 2002, the last time the World Cup coincided with an Argentine debt crisis.

Then, Argentina crashed out of the tournament in the group stage, piling misery on a soccer-obsessed nation of 40 million people as it suffered a record $100 billion default, the economy shrank almost 11 percent and unemployment soared.

What options are Argentina left with?

If Argentina does default this time, the crisis will be nowhere near as bad as in 2002 but it would likely send the peso currency even lower, further fuel inflation and extend the country's banishment from international debt markets.

Inflation is already running at above 30 percent annually and, after a decade of growth driven largely by heavy government spending, the economy is in recession.

'Keep an eye on government'

Argentine officials will on Friday hold more talks in New York with a mediator in a long-running dispute with investors who rejected restructuring terms on Argentine debt after 2002.

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President Cristina Fernandez portrays the "holdouts" as vultures. But faced with sapped foreign reserves and an ailing economy in need of foreign investment and hard currency, she has been forced into negotiations with the hedge funds leading the legal battle against her government.

If Argentina does not clinch a deal by July 30, it will fall into its second sovereign default in 12 years.

It is unclear whether Fernandez, who cannot run in next year's presidential election, will get a bounce in popularity off the back of the national team's success.

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With patriotic sentiment high, the government has run a publicity campaign including fiery, nationalistic spots during televised matches on state-run television.

One of the latest advertisements plays soundbites of Latin American leaders rallying behind Argentina in its battle against the holdouts, with heavy, dolorous music laid under.

Some opposition supporters and anti-government media have accused Fernandez's government of attempting to bury bad news during the tournament, citing an increase in public transport costs in Buenos Aires as an example.

"People have learnt not to get distracted by the World Cup," said Guido Gallo, a systems administrator with a multinational firm." Lots of my friends say 'let's keep an eye on the government because they are going to use the Cup to hide things'."