Dollar, credits and interest rates: this you have to know

. – Correct, the ones that were mismanaged or had problems from the past, but we don’t think it’s repetitive for the entire system. For now, it does not seem like a good idea to have bank shares, but because of the lower expected profitability, not because the business is at risk, quite the contrary, in the future, when rates fall, banks will have strong profits. It is necessary to be attentive to the change of cycle in the rates.

Do you know banks in trouble?

. – We gentlemen have no memory.

How do you see the Argentine economy?

. – Between December 2019 and December 2022, the GDP grew 4.6%, in 3 years almost the same as the population growth, this implies that we are with a very similar GDP per capita. Commodity prices reached a very high level in the summer of 2022, as a result of Russia’s invasion of Ukraine, but this year they fell and next year they will fall much more. This is not a good indicator for the country.

Will the drought leave consequences?

. – The drought is the third in a row and the seventh in the last 13 years, which leaves us very weak for the future. We are going to lose exports for a little over US$ 20,000 million, in the second semester exporters will have to import soybeans if they want to keep their factories running, GDP could fall between 4.0% and 5.0% annually, we do not see a positive scenario in the immediate future.

What can happen 3 years from now?

. – A change of government that leads a structural change, facing the 3 challenges of our economy, which are the social challenge to fight poverty, the fiscal challenge to end the chronic deficit and the growth challenge to get Argentina out of stagnation. It is essential to work on all 3 planes, so as to be able to cope with the economic problem taking into account all the actors in the economy.

Isn’t it just macroeconomics?

. – Unfortunately our country has very good economists who talk about macroeconomics, but few who talk about microeconomics, therefore, it is difficult to solve macro problems without a containment network for the daily economy, which affects SMEs, entrepreneurs and the foot man.

How do you see the transition?

. – We are beginning a period where expectations for financial assets reign, on June 26 we will have presented the lists of those who compete in the presidential elections, there are less than 90 days left for that date. Then, on August 13, there are the PASO elections, this will give us a complete result of the government that we can expect for the period 2023/2027.

In the meantime?

. – The markets are betting on bonds in dual pesos, which are the ones that adjust for inflation or the dollar linked (wholesale) and by corporate bonds. The shares will have a lot of room to grow in price. On the other hand, sovereign bonds will be pressured by the offer that the State will make soon.

Can you explain it to me?

. – The government will exchange bonds with state agencies. These organizations will commit to deliver bonars (local law) and globals (foreign law) which are bonds in dollars that arose from the last debt swap in 2020 and will take in exchange dual bonds in pesos maturing in 2036 that will be issued the Treasury.

So?

. – The Treasury will issue dual bonds maturing in the year 2036 and will receive in exchange bonar and global bonds in dollars maturing in the years 2029, 2030, 2035, 2038 and 2041.

What will you do with those bonuses?

. – It will sell them through tenders in the market, to the extent that pesos are needed to cover the fiscal deficit. This would imply an offer of bonds in dollars during the entire period until the next government takes office and, perhaps, there will be a remainder for when the next administration arrives. This would put downward pressure on financial dollars.

Will the next management use those bonds?

. – If they remain in the portfolio, it will use them too, because Argentina does not have a reputation for going out to look for new financing, and, on the other hand, international aid is not on the horizon.

Could the United States give Argentina a loan?

. – The United States supported Argentina with the IMF so that it receives US$ 47,000 million, and our country cannot return it, and it is difficult for it to pay the interest. The obligatory question is why would they lend us if we cannot pay the existing credits?

To live with ours

. – Probably the next government will have to change the economic plan and, instead of working with a low exchange rate, will have to model an economic plan with a high exchange rate, fiscal balance, market deregulation, anchoring of local prices with the exterior and a positive interest rate.

Do I have to rush to get credits now?

. – It is a good idea, to reach the change of government in debt and play a liquefaction of liabilities in pesos. The last mega liquefaction of liabilities was in 2001, I don’t think it was of the same magnitude, but something similar could happen.

How do you see the interest rate?

. – There is no doubt that in the context of accelerating inflation with weekly price updates, it is very likely that the interest rate will continue to rise. Any credit that entrepreneurs take today will be cheaper tomorrow. It is impossible to stop the inflationary dynamics without a government that generates confidence.

What’s going to happen with the dollar?

. – The wholesale dollar will continue to be depressed, if the government devalues ​​at a higher rate than the current one, the dynamics of price increases could spiral. What we have to follow closely is the gap, it seems to us that the gap has a transitory ceiling at 100%, but be careful that, if it exceeds that mark, it could go up to a gap of 120% where profit-taking always operated .

Conclusion

. – We are facing a new global and local scenario, where macro solutions must be complemented by micro solutions. It is essential that social, fiscal and growth issues be addressed at the same time.

. – There is not in sight a speech that contemplates attacking the three challenges at the same time. In Argentina, the adjustments are very messy, spending cuts are not made with a pair of scissors, they are made with an ax and many times they generate collateral damage for the population.

. – Argentina and Latin America will have to make a great sacrifice to overcome the economic problems derived from the pandemic, Russia’s invasion of Ukraine, the drought and the highest world inflation.

. – The rise in rates worldwide could restrict the flow of funds to Latin America and this will accelerate the adjustment in the region, which would affect our country.

. – There are 9 months left for the change of government, a change in the economic program will inevitably occur and, to mature tangible results, it will take at least 6 months.

. – Financial assets are moved by expectations, the prices of shares and bonds are in the subsoil and there could be a big rise. The real economy is heavier and it will be difficult for it to recover at the same pace as financial assets. Cheer up.