Such is the political capital invested in the exchange-rate peg that Mr Cardoso might opt instead for default, or strong capital controls, or some mixture of the two.

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The danger is that Pakistan may have to endure the greater evil of fuel shortages, currency controls and even default before it accepts the lesser evil of stiffer taxes, higher electricity bills and the IMF.

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Fixed at uneconomic rates, these price controls amount to a default on Argentina's contractual obligations to the utility companies, many of them foreign-owned.

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In addition, the actions require servicers to establish robust oversight and controls pertaining to their third-party vendors, including outside legal counsel, that provide default management or foreclosure services.

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