MercoPress. South Atlantic News Agency

International banks commit 8bn dollars to the new Argentine administration

If it all works out as planned it could be a great start for the incoming central bank president Federico Sturzenegger

The incoming government of Argentine president Mauricio Macri is about to receive its first financial boost from overseas, which according La Nacion sources could be in the range of 8 billion dollars.

 The operation involves HSBC, JP Morgan, Goldman Sachs, Deutsche Bank and Citibank, totaling anywhere between six and seven billion, while the extra billion would come from Spain's Santander and BBVA, once regulatory procedures are completed.

Apparently the Repo operation means the banks will deposit dollars in Argentina's Central bank, and in exchange they will receive a bond. The deal is expected to become effective sometime next week.

If this is the case and if all works out as planned, President Macri will be able to honor one of his campaign promises which is to end restrictions in the foreign exchange market and specifically the clamp on the US dollar.

In effect, the incoming central bank president Federico Sturzenegger said the 'first day' promise was limited to a minimum floor of international reserves which much depended on what they effectively discovered when taking over the bank.

La Nacion says the deal is directly linked to the trip to New York by Finance Secretary Luis Caputo who met with the leading banks and with the mediator Daniel Pollack, named by Judge Thomas Griesa, for the ongoing dispute Argentina has with hedge funds.

Apparently the positive outcome is the result of mediator Pollack's official release saying that the new Argentine administration is committed to begin negotiations with holdouts as soon as the new officials are confirmed in their posts.

The Argentine central bank is also counting on another eight billion, approximately, which are the grains and oilseeds hoarded by Argentine farmers, who are waiting for the announcement effectively dismounting the tax scheme on exports.