The Government, using a decree, has decided to defer the payment of interest and capital amortization services on the national public debt, instrumented through dollar securities issued under the law, until December 31, 2020. In total, payments of some $9.8 billion will be deferred, with only some $3.5 billion of foreign currency securities issued under international legislation.
Economic analysts estimated that even if Argentina managed to keep the coronavirus at bay, the economy would fall by at least 4% this year, as it is losing some $500 million a day amid this crisis. The impact would be more pronounced in the second half of the year. If the debt restructuring is not approved, it would further worsen short-term economic activity.
The S&P Merval index scored its fourth gain on Friday, gaining 1.9% to reach 26,505.41 units. The local stock market increased by 10.2% in the measurement in pesos (+7.1% measured at the implied exchange rate), dollar bonds climbed to 20%. Argentina’s country risk, as measured by JP. Morgan, fell 3.8% to 3,683 basis points, registering a 502 point drop during the week, equivalent to a 12% contraction.
The tourist dollar -which carries the 30% surcharge for the COUNTRY tax- rose 45 cents this Friday to 86.91 pesos. During the week, the dollar with surcharge climbed 54 cents and the official one increased 41 cents. The dollar with liquidation (CCL) – obtained from the purchase and sale of shares or bonds – rose 28 cents to 89.09 pesos, so the gap with the wholesaler closed on Friday at 37.3%. BCRA’s International Reserves rose Friday $19 million to $43,651 million. However, during the week the monetary authority’s coffers lost $84 million as a result of Monday’s sharp declines.
Both the IMF and the World Bank require bilateral creditors to suspend debt payments of IDA countries that request leniency. The proposal reaches some 76 states, not including Argentina. It is why debt renegotiation and sustainability is more important than ever. For the Argentine State, the main restrictions to be dismantled have to do with unsustainable debt. For example, interest spending on the 2019 dollar debt was $12.4 billion, according to the Congressional Budget Office. To put it in perspective, that’s almost 3 points of GDP.