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Montevideo, September 26th 2018 - 07:01 UTC

Argentina reveals financial needs; stock market and the Peso rebound

Wednesday, July 4th 2018 - 08:13 UTC
Full article 4 comments

Argentina will need to raise a net US$ 8 billion in the domestic debt market in 2019 to meet financing needs that include a US$ 7.4 billion primary deficit and US$ 25 billion in debt principal and interest payments, according to a Treasury Ministry document. Read full article

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  • Enrique Massot

    So in 2019 Argentina will need to “raise” US$ 7.4 billion to finance its primary deficit;

    The country will also need US$ 25 billion to service its current debt.

    Meanwhile, Clarin, a newspaper unsuspected of opposing the government of Mauricio Macri, notes the following:

    ”Between buying (US dollar) currency and expenses of (Argentines) travelling abroad, about 2.5 billion US dollars leave the country each month.“

    As reported above, in a presentation to investors Treasury Minister Nicolas Dujovne noted that the government ”needs to issue new debt equivalent to US$ 1.2 billion for the remainder of 2018,“ and that ”Argentina will need to raise a net US$ 8 billion in the domestic debt market in 2019 to meet financing needs.“

    Not only that.

    ”Argentina may need to issue more debt than planned if it is unable to roll over all of its maturing debt this year and next year.“

    Really.

    Who's going to risk investing in a country quickly approaching financial collapse when the recent decision to call the IMF was prompted by the unwillingness of private investors to keep lending money to Argentina?

    Meanwhile, Argentina's real economy continues to sink into recession as a result of Macri's economic measures.

    For those wondering how a resource-rich country like Argentina cannot flourish, the story developing since December 2015 provides some answers.

    It's not the ”Argentines“ who make these things happen. The current situation is, as in previous disasters, the making of a small group of rich and powerful who lied to electors and who have been bleeding the country nonstop ever since -- while keeping their assets securely stashed abroad in offshore accounts.

    This is the ugly reality of ”market-friendly Macri.”

    Jul 04th, 2018 - 03:52 pm - Link - Report abuse -1
  • Zaphod Beeblebrox

    ”Between buying (US dollar) currency and expenses of (Argentines) travelling abroad, about 2.5 billion US dollars leave the country each month.“

    Maybe so, but there has been a net flow of money out of Argentina since 2010. https://tradingeconomics.com/argentina/capital-flows The problem didn't start in 2015. Maybe Macri isn't fixing it, but the previous administration were certainly making things worse.

    “the story developing since December 2015 provides some answers”

    If you look at the 10 year curve I'd conclude that the story developing since December 2015 actually shows a slow improvement between 2015 and 2017 at which point there was a sharp downward turn. I don't know the explanation for this, and Macri may well be partly to blame, but I suspect some change in mid-late 2016 is what you should be looking for.

    Jul 06th, 2018 - 06:55 pm - Link - Report abuse 0
  • Enrique Massot

    @ZB

    “The problem didn't start in 2015. Maybe Macri isn't fixing it, but the previous administration were certainly making things worse.”

    Well. Did Mauricio Macri get elected on promises to do better than the CFK government? Didn't he said reducing inflation would be a breeze? Didn't he spoke about “zero poverty” and that there would be no peso devaluation and no economic adjustment?

    But let's check Argentina's foreign debt:

    From 2008 to 2015 it did not change much, staying under $160 billion US dollars.

    In the following two years -- from Jan. 2016 to Jan. 2018 -- it went steeply up, reaching $255 billion US dollars.

    As for capital flows, ZB is right: there's been a net outflow since 2010. The problem is, it was about 5,000 US billion dollars at the start of 2016 and reached an all-time record 10,000 billion US billion dollars early 2018.

    Furthermore, Zaphod, you are mitigating your past support for Macri and his policies, however you insist in finding some fault in a government that ceased to exist more than 30 months ago.

    Meanwhile, the markets are increasingly alarmed and unwilling to lend more money to a country they do not see able to pay back. Then Macri sprints to knock on the IMF doors in a panic, and the subsequent $50-billion stand-by loan announced fails to reassure investors who continue to flee in spite of ongoing US dollar purchases by the Central Bank. All the economic indicators are on the red. And you are still looking at past capital outflow trends?

    While respecting your opinions, I do believe you are now beating a dead horse.

    Jul 09th, 2018 - 06:51 pm - Link - Report abuse -1
  • Zaphod Beeblebrox

    I am simply trying to do a bit of a reality check by looking at some facts. The fact is things were bad and getting worse under CFK. Macri made some impossible claims and got elected (not the first time a politician has done this). Now, the question is has the decline under CFK now
    a) Continued at the same rate
    b) Accelerated
    c) Decelerated but still declining
    d) Stopped and leveled out
    e) Reversed or
    f) Something more complicated.

    People's perspective will be different and it depends which numbers you look at, but my impression is that Macri initially definitely slowed the decline and even started a slow recovery but is now declining again but I'm not sure yet how the rate of decline compares to historical values.

    Would you would argue that it has been (b) all the way?

    Jul 12th, 2018 - 06:07 pm - Link - Report abuse 0

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