“The payment of the debt, of the capital of the debt, will be repaid with new debt issues,” said the Secretary of Finance, Carlos Guberman, to the LN+ channel, after Milei’s speech in Congress on Sunday night.
“What we will pay in full, with resources generated through tax collection, is the interest on the debt,” he added.
Argentina has closed the debt markets, with a country risk, which fell to 1,360 basis points on Monday, following the Government’s conviction to maintain fiscal balance regardless of the macroeconomic context, but it remains at levels that prevent the country from issuing bonds at reasonable rates.
What is Argentina’s debt profile?
The Government is committed to improving the country’s credit profile and reducing country risk in order to regain access to international markets, In a year in which gross debt maturities in foreign currency amount to US$19,779 million in capital and US$8.947 billion in interest, according to the Finance Secretariat for the first quarter.
Argentina has a debt of more than US$42,963 million with the International Monetary Fund, and seeks to negotiate another program that includes new funds to strengthen international reserves and to be able to lift foreign exchange restrictions.
“Without saying it, (Milei) told us that she does not know when there will be a new program with the Fund. “That is why, instead of quarterly targets, he announced a fiscal policy reaction function,” described economist Guillermo Mondino in his X account, where he added that “the fiscal rule can help anchor expectations if it is credible. That is, if it is consistent and sustainable politically and socially.”
What does the 2025 Budget project say?
The president presented a Budget that ““protects the fiscal result whatever the economic scenario”with a methodology that, he said, achieves three objectives: “guarantee fiscal balance” and “force the State” to absorb the cost of eventual recessions and to “return” the excess revenue through tax cuts during periods of abundance.
“As long as we can continue to meet the financial equilibrium situation, as we are clearly doing this year (fiscal surplus of 0.4% of GDP in the first seven months of the year), The country risk has to go down“, Guberman anticipated.
The secretary added that he maintains this forecast even without abandoning the strong restrictions on entering and withdrawing capital from Argentina or accessing the official exchange market, known as ‘exchange rate trap’ and which are one of the obstacles for the country to receive investments.
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Mariano Fuchila
When will the exchange rate restrictions be lifted?
He also explained that the Government’s intention in the new Budget is that These restrictions are “not” in force “all year round” 2025, although he clarified that “There is no specific date” to eradicate them but rather to lift them when “conditions are met to do so” and “above all” when there is “certainty” that the decision will not have to be “reversed.”
Source: Ambito
