A technical mission of the International Monetary Fund (IMF) arrives on Wednesday whose report will be a vital tool for reprofiling payments of $44 billion stand-by credit. That same day, the minister of economy, Martín Guzmán, will address Congress on his plan for “sustainable debt” renegotiation which also involves $67 billion owed to private bondholders. On Thursday, about AR100 billion of the AF20 Dual Bond mature.
Argentina’s Senate voted unanimously in favour of a bill that grants power to the government of President Alberto Fernández to handle a massive debt restructuring of bonds issued in foreign currency. Buenos Aires is grappling with ca. $100 billion in sovereign debt it is seeking to restructure with its creditors, including the IMF. An IMF technical mission is expected to arrive in Argentina on Feb. 12 to continue talks.
The Government of the province of Buenos Aires proposed today to pay 30% of the bond capital due on January 26 ($ 75 million) and defer the remaining 70% to May 1. Bondholders will also receive the interest corresponding to that postponed capital, if at least 75% of them accept the terms before this Tuesday.
During the first month of Alberto Fernández’s government, Argentina’s public debt was $323.2 billion, which is almost $12 billion more than in November, according to data from the Ministry of Economy. As of December 31, 60% of the gross debt corresponds to public securities, 21% to international organisations, 10% are from Treasury Bills, 4% are from temporary advances of the Central Bank, 2% from official bodies and 3% belong to “others and pending restructuring.”
Argentine tax withholding agency (AFIP) published in the Official Gazette, the regulation of the moratorium for SMEs and self-employed established in the so-called Law of Solidarity and Economic Reactivation approved in December. The moratorium will have an average of 42% on accumulated debts until the end of last year and a payment term of up to 10 years with incentives for those who enter as soon as possible.
Alberto Fernández administration will grant benefits to Argentinians who repatriate before March 31 at least 5% of their assets abroad. Those who accept the proposal will pay a reduced rate (1.25%) of 2.25% personal property tax on condition that they keep the funds in the country until December 31, either in bank accounts or in various investment options.
Argentina’s Central Bank (BCRA) lowered the benchmark interest rate floor (Leliq) to 48% from a previous 50%, the fifth cut in under two months aiming at overcoming recession and lowering inflation. In that period Leliq has been lowered by 15 percentage points. Banks have been responding positively with loans to SMEs below expected inflation and personal credit lines with rates of around 45%.
Argentina President Alberto Fernández issued a decree extending a freeze on diesel and gasoline prices until the end of February, saying that “a comprehensive analysis of tax update” will be carried out until then. The freeze was implemented by predecessor Mauricio Macri in August and already extended by Fernández in December. Fuel prices increased an average of 41.8% during 2019.
Argentina Chamber of Deputies might approve today the so-called Debt Sustainability Bill that will grant powers to the Minister of Economy, Martín Guzmán, to negotiate the sovereign debt. Among those faculties is the determination of the final amount to renegotiate of a universe of $ 140 billion in the securities issued by Argentina under foreign law, which represent 44.9% of the total Argentine public debt.
Aerolíneas Argentina operating deficit has increased 60% in the last four years and its current negative balance is $ 530 million, said the president of the state company, Pablo Ceriani. The new administration plans to reverse the shrinking of the wide-body fleet, and has just announced the addition of three flights between Buenos Aires and Madrid, totalling 10 weekly frequencies as of June 29.