“The bonds are being repurchased at difficulty levels and will result in a medium-term savings on principal that will begin to amortize in 2024. However, The operation comes at the cost of currency shortages that strain the country’s external finances, while doing little to support the sovereign’s ability to pay in 2024 and beyond.”
In turn, it warns that the authorities “have not specified how much of the billion dollars will be allocated to the purchase of each bond, nor the deadline for completion of the purchase process.” From the Government they assure that there is no obligation to provide that information.
In relation to the resources that are used for the purchase of bonds, Moody’s questioned the argument for which Treasury resources are allocated to the Central Bank: “investors have questioned the use of resources in a context of external liquidity restriction and the expectation of a decrease of foreign exchange inflows due to lower agricultural exports this year due to a severe drought.
Lastly, the analysts’ warning is in relation to reserves: “although international reserves held at the central bank have increased in recent months, reaching $42.8 billion (approximately 6.3% of estimated GDP for 2022) as of January 24 2023, excluding bank reserves, swap lines with China (A1 stable) and the Bank for International Settlements, and other liabilities, net reserves are much lower at just over $6 billion The Argentine government has agreed to bolster those reserves to meet the goals of its existing $44 billion program with the IMF. Reserve accumulation remains a challenge as a result of weaker exports that have led to the introduction of new foreign exchange restrictions and multiple exchange rates that are exacerbating distortions in the economy.”
Source: Ambito
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