Many analysts have a positive view of the measure, which was promoted by the director of the Central Bank (BCRA) Leandro Cleri, very close to Sergio Massa, because they consider that he aims at order treasury financing, a step they consider necessary. However, others criticize him “financialist” approachsince it does not solve the fundamental problems of the local economy (the scarcity of reserves and the difficulty of obtaining the income of Dollars). These criticisms and praise exist both outside and within the Government. So what to expect for the next few days?
In the same sense, for the Invecq economist Juan Pablo Albornoz, “the measure aims to give it a little more air to financial program”. As stated, what is sought is to force the entities to liquidate their position in Bonares and that with the pesos they obtain from that sale attend the Treasury tenders and buy debt. The objective is clear, according to Albornoz: “get financing”.
However, it warns that, to achieve this, the Government must repurchase debt in dollars (Global Bonds – Foreign Law) to try to get a REPO and step on financial dollars. The most critical part, in his view, is that he does this by selling the bonds he bought cheaper at about 35 cents for every dollar the instrument promises to pay for, but the transcendents, because there is nothing officially approved yet, he would be willing to go out and sell those bonds cheaper than you paid for them. And, according to Albornoz, “this could be read as a sign of strong desperation: since the IMF no longer lets it use reserves to buy back bonds, it now uses this mechanism.”
Measures for a complex reality
Thus, it considers that, beyond the specific impact of the measure, this shows that The macroeconomic outlook is getting more complicated every day. “Financial dollars continue to be anesthetized without reflecting the seriousness of the situation that the field is going through and the consequent lack of dollars”, he describes. And, on the other hand, he points out that these “financial swerves” that the Government is giving seek to close a very tight financial program after a debt swap that failed and with a remainder of private demand that does not validate terms beyond the elections .
On the other hand, he explains that, since you will see a sharp rise in bond supply, “the big question is where is the demand”. What would be expected would be that the solution to this problem has been found in the meeting that the Minister of Economy held today with banks, ALYCs, mutual funds and insurers, in which it was possibly agreed to make some regulations more flexible to encourage demand for these instruments and/or that said entities may have a greater exposure to debt in foreign currency.
The favorable points of the measure
From another perspective, Pablo Ferrari, an economist from the University of Avellaneda, believes that it is a good decision to give public bodies more stable bonds, which would adjust for the linked dollar or CERas it was possible to know preliminarily, while those who have at this time were trading low and had been falling.
Likewise, he considers that it is a decision that “reduces intra-public sector debt, which he sees as another good news.” And, finally, it considers that, by being able to have this type of bonds that allow MEP and CCL dollars to operate, some sectors they will be able to access dollars without affecting BCRA reserves.
The latter refers to the fact that it is expected that the decree that will implement the announced measures will be accompanied by resolutions from the BCRA, the National Securities Commission and the National Insurance Superintendency to remove the restrictions that some institutional investors have to buy CCL through Bonares.
Communication “A” 7667 of the BCRA, of January of this year, already allows the option for public organizations that receive financial assistance and/or non-reimbursable contributions from international organizations to carry out this type of operation and, if they need to use these funds, the they have to settle in the MULC.
A “financialist” measure?
All in all, the economist from the Fundación de Investigaciones para el Desarrollo (FIDE) Pedro Gaite believes that, although the scope of the measure and its impacts still need to be defined, “if the objective is reduce the exchange rate gap by lowering the CCLtoo much expectation is being generated about a point that is not the central one today ”.
And it is that, for him, the main problem of the Argentine economy, today, is the lack of reserves and the drought, which complicates a scenario that was already difficult. Gaite points out that this has an impact on economic activity and inflation and that “these new measures do not solve any of these problems.”
However, he finds a relationship with this problem and the arrival of these decisions by the economic team in the fact that, to a large extent, the objective of these measures is, as previously stated, find alternative sources of financing in a context in which the drought also has a negative impact on collection and the Government will have problems reaching the fiscal goal of the International Monetary Fund (IMF).
Wait to evaluate the effectiveness
The big question, going forward, is whether the economic team will achieve the objectives proposed with this measure in view of the fact that it has been trying to solve the problem of financing terms with successive announcements and has not been successful. “With the repurchase of the bonds in dollars, they were supposed to rebound and the effect was slightly negative, almost close to zero; the repurchase of the debt in pesos did not have any results either, in fact a risk rating agency evaluated the event as a selective default, and, this Wednesday, after the announcements, the bonds fell almost 7%“, describes the market expert Marcelo Bastante.
One piece of data that he mentions as significant is the fact that bank shares have also fallen, “which always have a high correlation with the bond evolution“However, he acknowledges that this is happening in a context in which, this Wednesday, the United States Federal Reserve (Fed) increased the reference rate by 25 basis points, so he anticipates that “we will have to wait and see what what happens on Thursday to evaluate if there is any rebound or if the aforementioned trend is confirmed”. And, on the other hand, he considers that everything will be clearer when the relevant regulations are known.
Source: Ambito
