In tune, the Argentine shares listed on Wall Street (ADRs), suffer most setbacks. Both in Buenos Aires and in New York, the losses are led by the financial sector, with the BBVA bank in the lead.
The poor performance comes as the world’s major stock markets are plummeting; In the US, the technological Nasdaq falls 2.2%, while in Europe collapses of up to 6% are verified, as is the case of the FTSE in Milan.
Global stocks weakened and demand for shelters grew after Russian military forces seized Europe’s largest nuclear power plant.in what Washington described as a reckless assault with the risk of catastrophe.
In this context, Russia’s global financial isolation intensified on Friday when the London Stock Exchange (LSE) suspended trading in its latest Russian securities and some insurers withdrew coverage for exporters.
The global tension nullifies the positive effect that the official announcement of the agreement between the Government and the IMF had generated in the markets.
The deal still needs to be approved by the Argentine Congress, in a debate that will be held against the clock since at the end of the month some US$2.8 billion are due, a figure that exceeds the net reserves of the Central Bank. Both within the ruling party and within the opposition there are conflicting positions regarding the vote.
The repayment period of each disbursement from the multilateral credit organization is 10 years, with a grace period of 4 and a half years, which implies that the country will begin to pay the debt from 2026 and until 2034.
Regarding the economic policy objectives, the Government will advance in a process of fiscal consolidation to reach a balance of public accounts in 2025. According to the official statement from the Ministry of Economy, this will be sought to be achieved through the recovery of economic activity without spending cuts.
At the same time, the agreement contemplates a path towards positive interest rates in real terms and a real exchange rate compatible with the reserve accumulation objective.
Regarding energy rates, the goal is to reduce subsidies by 0.6% of GDP this year. As announced by the Executive Power, the higher income sectors will pay the full rate from now on, that is, they will not receive subsidies.
Meanwhile, the beneficiaries of the social rate will have an increase limit equivalent to 40% of the variation in wages in the last year, while the remaining population will receive a rise equivalent to 80% of the movement of the Salary Variation Coefficient (CVS ).
“Our government is not adding a single dollar of debt. What we are doing is refinancing those maturities, gaining time,” said Economy Minister Martín Guzmán on Friday.
The official also warned in dialogue with Radio 10 that improving the public debt profile “is essential to lower inflation” and stressed that, to achieve this goal, “it is essential to reduce the primary deficit.”
In addition, he explained that The first disbursement by the agencies would be equivalent to US$9.8 billion, of which nearly US$6 billion would remain net to increase reserves.
Country risk and bonds
For its part, sovereign bonds in dollars collapse up to 4%being the securities issued under local law the most affected.
Thus, the country risk, measured by the JP Morgan bank, climbs 4.2% (78 units) to 1,928 basic points. In this way, the indicator returned to the same level as prior to the understanding announced with the IMF on January 27.
On Thursday, the bonds had recovered a large part of the losses after the Government and Fund statements, although they failed to close with the majority of increases.
“Dollar bonds outlined timid rises after the announcement, but closed with mixed numbers. The weighted average price closed at US$31.82 (-US$0.06 1D; -US$1.38 5D). The key is next few days will be in the debate within the enclosure and the political support that the Government needs to obtain before March 21”, deepened from the portfolio company Portfolio Personal Inversiones.
Source: Ambito
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