Category: Macroeconomy/Finance

Information regarding Argentina’s productive sector and the country’s macroeconomy.

How Long Before Argentina Goes Bankrupt?

Argentina has only $10 billion in foreign currency reserves, and owes around $22 billion to the IMF in two years, then another $20 billion in three years of the IMF’s $56 billion biggest aid package ever. How Argentina pays this back under a government that was elected to give back to the public all the subsidies that Macri took away is very hard to imagine.

Fuels and oil prices set to increase in Argentina

On November 14 expires the decree which froze the price of fuels and crude oil for the domestic market for 90 days, and an increase of around 15%, the estimated gap between domestic and international prices, is expected. However, the Government is considering granting a partial increase before that deadline, while some companies argue that the gap is in fact 20%.

Argentina’s Central Bank accelerates disarmament of liquidity letters and restricts purchase to banks

The Central Bank has announced that from Friday 1st November the banks that integrate part of the reserve requirements on sight deposits with the purchase of Liquidity Letters (Leliq), will only be able to do so with 5% of the total of these placements in Treasury Bonds (BOAT) and the remaining 40% in pesos. That means eliminating the possibility of integrating 10 percentage points of 45% that applies to reserve requirements on demand deposits at 0%. With this decision, the Central Bank takes another step towards the disarmament of the snowball of the Leliq, as the market consensus had baptized that instrument of liquidity regulation, which has been growing since August 28, when they had amounted to $1.3 trillion, equivalent to 40% of foreign exchange reserves and more than 104% of the monetary base.

More than $100bn of Argentine debt hangs in the balance ahead of a probable restructuring

Investors in Argentina’s sovereign and Province of Buenos Aires debt expect to be fully organized into two separate creditor committees sometime in the first two weeks of November, an investor told IFR. Bondholders are currently organizing the two committees, which are expected to exceed 25% of bondholders of the debt, the investor involved in the process said. More than US$100bn of Argentine debt hangs in the balance ahead of a probable restructuring. The country has around US$44bn of loans with the International Monetary Fund.

Argentina’s markets jumpy as President-elect Fernandez plots new path

Argentina’s President-elect Alberto Fernandez pledged to lead the country in a new direction as financial markets jumped around with investors grasping for any signs of the Peronist’s plans. On Tuesday the peso currency ARS=RASL and over-the-counter bonds closed up after earlier falls, while the Merval stock index .MERV dipped slightly on profit-taking. The black market peso jumped over 10% on month-end demand for local currency after a pre-election rush for dollars last Friday.

Taming Argentina’s economy: the team with daunting task

The economic activity is at minimum levels since 2001, with consumption falls in 42 months of Mauricio Macri’s 45 months in office. Since Macri took power in 2015 after defeating the candidate of Kirchnerismo, inflation has accumulated more than 290%, dollar has rocketed to 560% (from 9.84 pesos in 2015 to current 65 pesos), the price for electricity 3,240.1%, gas 4,096.3%. Argentina’s public debt grew more than 50% between December 2015 and June 2019, which represents an amount of more than $334 billion. In that period, $73,160 million also left the country.

New elected president Alberto Fernández inherits an economy in critical condition

The economic activity is at minimum levels since 2001, with consumption falls in 42 months of Mauricio Macri’s 45 months in office. Since Macri took power in 2015 after defeating the candidate of Kirchnerismo, inflation has accumulated more than 290%, dollar has rocketed to 560% (from 9.84 pesos in 2015 to current 65 pesos), the price for electricity 3,240.1%, gas 4,096.3%. Argentina’s public debt grew more than 50% between December 2015 and June 2019, which represents an amount of more than $334 billion. In that period, $73,160 million also left the country.

Argentina Central Bank toughens the exchange clamp: purchases of no more than $200 per month

On Sunday midnight, soon after the elections, the Central Bank (BCRA) informed its decision to reduce the purchase of dollars from $10,000 to $200 per month for individuals with a bank account and to $ 100 per month for cash purchases. These limits are not cumulative, the BCRA said. The BCRA has $43.5 billion of gross reserves left. Last week, it lost nearly $3.4 billion and so far in October, $2.1 billion. In September, it lost $10.6 billion.