(Adds details on default scenarios, background)

By Walter Brandimarte

NEW YORK, July 8 (Reuters) - Time is running out for Argentina to correct its economic policies before another debt default becomes unavoidable next year, Standard & Poor's said in a report published on Wednesday.

President Cristina Fernandez, who lost control of Congress after mid-term elections late last month, still has the tools to curb spending, regain access to international capital markets and ink a new deal with the International Monetary Fund to close a 2010 budget gap, S&P said.

"Perhaps the biggest risk for Argentina's rating is that the government might not use the limited capacity it still enjoys for changing economic policies in the coming months," S&P analyst Sebastian Briozzo wrote in the report.

Tuesday's cabinet reshuffle, which included the replacement of Argentina's cabinet chief and economy minister, could provide an opportunity for change, as many economists expected.

But instead, Briozzo said, what has been seen so far is "a continuation of the political and economic approach" adopted by Fernandez and her husband, former president Nestor Kirchner, since 2003.

"So how much time does the government have? It has some, as the sources of finance indicate, but not a lot," the analyst said.

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