Demand for “safe haven” instruments grew after Russian military forces seized Europe’s largest nuclear power plantin 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.
“Argentine assets are already in a trend of having set a floor and recovering. But that recovery still depends on several things. The first thing is the context and that is where the main problem for bonds is,” the Delphos analyst explained to Ámbito. Investment, Leonardo Chialva.
“The outflow of silver from emerging funds was accentuated this week, because investors do not want to have Russia and Ukraine. And that hits all those who are in those indices, Argentina includedwho also has a reduced and limited volume after the renegotiation and sale of foreign funds,” he said.
The global tension nullified the positive effect that the official announcement of the agreement between the Government and the IMF had generated in local markets.
The deal still needs to be approved by Congress, in a debate that will be held against the clock since some US$2.8 billion are due at the end of the month, 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 how to direct 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 more 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.
The bonds had recovered by the end of Thursday a large part of the losses after the Government and Fund announcements, although they failed to close with the majority of increases.
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As for equities, the Leading index S&P Merval Bolsas y Mercados Argentinos (BYMA) erased its initial gain and sank 2.2% this Friday to settle at 89,515 units. The reference, measured in dollars, had registered its highest value since November 2021 on Thursday.
In tune, Argentine stocks listed on Wall Street (ADRs) also suffered most setbacks. Both in Buenos Aires and in New York, The losses were led by the financial sector, precisely by the BBVA bank, which suffered losses of around 7.5% in both markets.
The poor performance was accompanied by crashes in the world’s main stock markets; In the US, the technological Nasdaq fell 1.7%, while in Europe collapses of up to 6% were verified, as happened in the case of the FTSE in Milan.
“Assets fall due to what happens abroad,” said economist Rodolfo Santángelo, who believed that the agreement with the IMF “is a fiscal and monetary straitjacket, with a hidden devaluation.”
Source: Ambito
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