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BUENOS AIRES, Aug 16 (Reuters) - Ratings agency Fitch on Friday downgraded Argentina’s sovereign debt rating from ‘B’ to ‘CCC,’ flagging an increased likelihood of a default in the wake of a shock primary election result that plunged the country into its latest economic crisis.

Argentine markets were in free-fall for most of the week after Sunday’s vote when center-left presidential candidate Alberto Fernandez trounced center-right President Mauricio Macri. The scale of Fernandez’s victory suggested he could win the October ballot in the first round, potentially putting and risking an end to free-market economic reforms and an IMF-backed austerity plan.

In a fresh blow for Argentine policymakers on Friday, Fitch downgraded Argentina’s debt to ‘CCC,’ and said it expected the country’s economy to contract 2.5% in 2019, down from a previous forecast of 1.7%. Fitch added that it saw Argentine government debt rising to around 95% of gross domestic product in 2019.

“The downgrade of Argentina’s ratings reflects elevated policy uncertainty following the primary elections, a severe tightening of financing conditions, and an expected deterioration in the macroeconomic environment that increase the likelihood of a sovereign default or restructuring of some kind,” Fitch said.

The ratings agency added it expects growth to be flat in 2020, while also cautioning that there was likely to be plenty of uncertainty “given lack of clarity around key economic policies post-election.”

Fitch said the chances of Fernandez wining the election had grown, raising doubts about the future of Macri’s IMF-backed austerity plan. The fact that Fernandez’ running mate was leftist former President Cristina Fernandez de Kirchner, a longtime skeptic of the IMF program, only heightened those doubts, Fitch said.