The problem of Argentine economy is he fiscal deficit, debt swap It is a necessary but not sufficient condition to lower inflation.
Officialism and opposition remain involved in a dispute that is of no use to anyone; what’s more, both lose credibility. The ruling party wants to make the exchange and the opposition denounces a bomb for the next administration.
The government, instead of focusing on reducing the fiscal deficitwhich for these hours amounts to 4.4% of GDP, Its sole goal is to achieve refinancing in pesoss, a necessary but not sufficient condition to solve the problems of our economy.
Debt super-swap: time bomb or big move by Sergio Massa?
The opposition You are wrong when you say that they leave you a bomb for the enormous debt in pesos to be due in one day for next year, the bomb is the enormous fiscal deficit foreseen for this year and that conditions the next government.
The current government needs to arrive as it is: delaying the exchange rate, with negative rates against inflation, seeking to surf the crisis and landing as smoothly as possible.
The opposition does not show a clear plan for the day it reaches government, He only prefers that the exit costs be paid by this administration, in order to come to power as comfortably as possible.
The ruling party and the opposition are unable to agree at a critical moment for the country.
We have just lost US$ 20,000 million of agricultural exports. This implies that we will lose US$ 20,000 million in imports and GDP will probably fall 3.0%. This would cause a loss of approximately US$ 15,000 million.
Many companies will fall by the wayside at this juncture, fields that will not be able to recover from the enormous loss, inland towns that will be turned off for a long time due to the poverty effect and without any help from the national, provincial and municipal government.
How the markets responded to the Massa swap announcement
Monday the 6th was a strange day, sovereign dollar bonds rose. But not to get excited: the bond maturing in 2030 yields 40% in dollars, it is not a jewel either. But the dual bonds left a fall that brought their yield to levels of 6% per year for the year 2023 and 7.7% for the year 2024.
The dual bond is in pesos and adjusts for inflation or the wholesale exchange rate, whichever is higher. it’s a bonus win win, It goes up or up, it is the condition that the banks put to refinance.
Las actions makes 7 wheels that repeat priceprofit taking is just around the corner, a breeze from the outside could leave a major loss.
Blue dollar today: minute by minute of the price of this Tuesday, March 7, 2023
He dollar is still frozen no variations. It denotes that the street is low on liquidity, it is necessary to sell to finance working capital or current expenses, it will take time to rise, but each day that the assault on $400 passes is closer.
On Tuesday, March 14, will know the inflation of Februaryit is likely that it will be located at 6.0% per month, this would give us an annualized inflation of around 100% per year.
The Central Bank, with a nominal rate of 75% per year, leaves us with an effective annual rate of 107.0% per year, a priori it would not warrant an interest rate rise, everything would be relegated to April or May.
In the meantime, thes companies can take credit at negative rates against inflation, it’s a good way to start putting together the 2023 financial program.l credit, that today is available, tomorrow we do not know if we will find it in the market. We need to reach the year 2024 with liquidity.
The problem is not financing the deficit, the Argentine tragedy is the deficit. It seems that neither the ruling party nor the opposition are very clear about it, or they omit to say it because they both fell into the same trap.
* SDS Economic and business adviser
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