The production of industrial SMEs in January registered the lowest decline in the last 20 months, with a 0.3% fall compared to the same period of 2019, the Argentine Confederation of Medium Enterprises (CAME) reported. Six of the eleven surveyed items fell and only one remained unchanged. The four sectors with annual growth were Food and beverages (0.2%), footwear and leather goods (1.9%), chemical products (11.9%) and textile and clothing products (2.3%).
Argentina’s sovereign bonds edged up on Friday after a tumultuous week following the IMF technical mission saying the country would need major debt restructuring amid concerns about default. Local over-the-counter bonds rose an average 1.1%, trimming losses for the week to just 0.5%. A dollar ‘Par’ bond was one of the top performers, up 3.1%. Argentina’s country risk index eased 37 units to 2,055 basis points from almost 2,600 points September.
Argentina National Institute of Statistics and Census (Indec) reported a trade surplus of $1.02 billion in January, from a surplus of $373 million a year earlier. Exports declined slightly to $4.55 billion in the month from $4.59 billion a year earlier, while imports fell to $3.53 billion from $4.21 billion in the same period. Trade (exports plus imports) decreased 8.% in relation to the same period of the previous year at $8.1 billion.
Argentina Economy Minister Martín Guzmán and IMF Managing Director Kristalina Georgieva agreed to start Article IV consultations, during conversations on the sidelines of the G20 meeting in Riyadh, Saudi Arabia on Saturday. The Article IV review might pave the way to changing the terms of the IMF $56bn stand-by loan for a new program. Guzmán is travelling to Washington today to hold further meetings with IMF staff.
Argentina's recession-hit economy shrank by 2.1% in 2019, the INDEC national statistics bureau said. The economy contracted by 0.3% in December compared to the same period in 2018. The hardest-hit sectors that month were financial services (-10%), and construction (-8%). On the other hand, the fishing industry grew by 13.5%. GDP had already dropped by 2.5% in 2018.
The Ministry of Economy swapped AR$9 billion ($146mn) of the Dual Bond for securities nominated in pesos at a private Badlar rate plus surcharge with maturity on August 5, 2021. It also obtained AR$3.6 billion through the tender of Lebad letters with maturity on May 28 and August 28. Argentina decided to postpone to Sept. 30 the payment of the AF20 dual bond that matured on Feb. 13 after restructuring negotiations with the majority of bondholders failed.
The average income of Argentine workers has slumped by 44.3% in dollar terms since 2015, according to a report by the Universidad Nacional de Avellaneda (Undav). This was predominantly due to the peso's heavy devaluation and real wage lag during the last four years. The decline was even sharper when measuring the purchasing-power of the minimum wage, which passed from representing $589 at the end of 2015 (AR$5,588 at that time) to the current $268 (AR$16,875 pesos) – a plunge of almost 55% in only four years.
The net formation of external assets of Argentine residents, known as 'capital flight', was $60 million in January, the lowest level in almost a decade, according to the last exchange balance of the Central Bank (BCRA). The 'services' account registered a currency outflow of $26 million, a sharp reduction compared to $686 million in the same month of 2019. Argentina capital flight broke the historical record in 2018 with an outflow of $27.3 billion that year.
Argentine bond prices fell 1.3% on Thursday after an IMF technical mission essentially gave the government a green light to restructure about $100 billion in bonds and loans, including $44 billion owed to the IMF. Argentine bond prices are down 4.8% so far this year. Country risk spreads 11EMJ stood 82 basis points wider at 2,117 over safe-haven U.S. Treasury paper, indicating an increase in the perceived likelihood of default.
Argentina’s debt load is unsustainable, the International Monetary Fund said after completing a week of meetings in the country, paving the way for the government to ask private bondholders to take on losses as it prepares to renegotiate its obligations. A “meaningful contribution” will be necessary from private bondholders to restore the country’s debt sustainability, the IMF said at the end of its first technical mission in Buenos Aires under Alberto Fernandez’s presidency.