The maturities that come, rates and the doubts that emerge
To be understood, the minister Luis Caputo Think that, if this scenario persists, The slowdown of the activity level will be deepened, but there will also be more complications for the fulfillment of the credits. However, the real danger that the Government does not confess – the reason for the Friday chain – is that a Increase in domestic public debt stock of such dimensions that even with all the adjustment and makeup of the world can be discussed of “surplus”.
The data is that, from here As of January 2026 the maturities to refinance equals 12.3% of GDPwith a concentration of 8.7% of GDP between August and September. Hence, government advisors understand that, to channel the overflow of interest rates, it is key that political negotiations enter rationality into the laws that are processed in Congress. To this we must add that in the government they do not know what degree of credibility can arouse the scheme of exchange bands.
The Ministry of Economy will face this week a debt expiration in pesos of just under $ 15 billion. The sight is put in what will be the rate that the Government is arranged in order to renew those letters.
Luis Caputo’s reasons and the subbaja of interest rates
Caputo’s decision to increase rates of interest responds to two goals Main: Control disproportionate monetary expansion and guarantee the renewal of a critical debt. As previously noted, the monetary base grew 35% in the first seven months of the year, exceeding 17% inflation, according to the Quantum Finance report, due to BCRA transfers to the Treasury and the disarmament of financial instruments.
This excessive liquidity Press the exchange rate and pricesjustifying higher rates to sterilize the market. In addition, the need to refinance maturities for $ 23 billion (about US $17.5 billion) in August, in a context of high bank lace (from 20% to 40%) and short short rates (bonding to one day to 39.1% TNA, repo to 65%), forces Caputo to prioritize the attraction of investors, although this increases the productive credit and cools the economic activity.
While the government seems willing to maintain or even raise interest rates in the short term, perpetuating induction to a recession to contain inflationary and exchange pressures, the economic team bets on A parallel strategy of political containment.
The central idea is to domesticate Congress through political agreements that shield any initiative that implies greater public spending or that threatens the alleged fiscal surplus, which would reduce the perception of country risk and, consequently, reposition rates at lower levels in the medium term. This vision is aligned with the need to restore credibility in the exchange band regime and legislative negotiations, avoiding expansive laws that unbalance public accounts. However, recent turbulence have left significantly high rates compared to previous months, with real yields for treasure bonds exceeding 20% annually on projected inflation, and financial costs for companies and individuals that touch or exceed 50-70% annual, aggravated by additional tax charges.
The fight in Congress and the parallel parallel in the market
The Government seeks to capitalize on these defeats to strengthen its tax adjustment narrative, presenting the surplus as the “crown jewel” of its economic program, although analysts speculate that Milei also directs its message to the “market”, given the lack of credibility in fiscal figures – qualified as “a drawing” by opponents – and a high country risk. This strategy reflects the urgency of sustaining the weakened fiscal pillar, at a time where October legislative elections could alter the balance of power in Congress.
Milei’s commitment to a “veto to all or nothing” against opposition projects – as the increase in the retirement mobility formula, the extension of the pension moratorium, the emergency in disability and university financing – implies, according to the government, significant risks, since the estimated fiscal cost is inflated up to 2.5% of the GDP, exceeding the projected surplus of 1.6% promised to the 1.6% promised. IMP If the vetoes are not supported – real possibility given the majorities close to two thirds in Congress – the primary surplus, they think of the Casa Rosada, could evaporate, leaving only “the lie.”
This political dynamic It forces the government to negotiate with provincial governorsusing discretionary funds such as the former Federal Fiduciary Fund for Regional Infrastructure, now under the control of Luis Caputo, to ensure alliances. However, wear in the image of Milei – with negatives overcoming positive surveys – and electoral projections that anticipate a more fragmented congress, could complicate the implementation of the adjustmentexacerbating the need for contractive monetary measures to compensate for fiscal fragility.
The economic plan of the Government of Javier Milei, executed under the direction of Luis Caputo, has established itself as an extreme tax and monetary adjustment experiment. The strategy of raising interest rates, designed to absorb excess liquidity and facilitate the refinancing of a mass debt, is combined with a drastic cutting of public spending, generating an economic contraction that affects industry, retail trade, strategic sectors such as a dead cow and, in a alarming way, Argentine families. New data from the Argentine Catholic University (UCA) reveal a generalized “economic stress”with 64% of households facing severe financial difficulties, which highlights the social costs of this model and its regressive impact on a country with structural fragilities.
The induction of a recession: key elements and expanded evidence
Milei and Caputo’s economic plan is based on A controlled recession as a tool to discipline inflationbut real costs are increasingly severe. The already identified elements include persistent inflation (2% in food in the first days of August), a historical collapse of public works expense (-91.4% year-on-year in July) and an exponential increase in the payment of interest interests (+353% year-on-year). To this is added the impact of the monetary adjustment in the industry, with 70% of the companies reporting stagnant or low production, and in retail trade, with SME sales falling 5.7% year -on -year in July, accumulating a retreat of 23.2% in the year. Even Vaca Muerta, a strategic pillar, faces credit restrictions and a drop in activity, with reduced drilling equipment from 36 to 29 projected by September 2025.
The most recent evidence, provided by the UCA Social Debt Observatory, adds a critical dimension: the economic adjustment is generating an unprecedented “economic stress” in Argentine families. According to the study, 64% of households face difficulties in covering basic expenses, a significant increase compared to 56% registered in the first quarter of 2024. This deterioration is due to the combination of inflation, loss of purchasing power and cuts in social programs, with 60% of respondents reporting problems paying essential services such as light, gas and water, and 45% reducing expenses in essential foods.
The most vulnerable sectors, particularly in Greater Buenos Aires, face aggravated precariousness, with 30% of households depending on informal income or state assistance, both sources diminished by the adjustment. This “economic stress” is a direct reflection of the induced recession. High interest rates increase credit, limiting consumption and investment, while the cut of public spending, particularly in public works and social programs, reduces employment and domestic demand. The fall in SME retail sales, which affects all items (from food to appliances), and the increase in supplies costs (5-8% after devaluation) reinforce a vicious circle where companies face reduced margins or closures, and families see their consumption capacity diminished. In this context, Caputo’s strategy not only cools the economy, but also pushes it towards a structural contraction that threatens social cohesion.
Source: Ambito
