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Argentina, a country with many opportunities (and a great challenge)

Argentina, a country with many opportunities (and a great challenge)

Although there are economic achievements of the management, there is still a long way to go. The main focus of potential investors in Argentina is in Congress.

In recent weeks we have witnessed news that we would not have imagined a few months ago. The inflation in a clear decline (one digit is expected for the month of April), financing rates falling, the exchange rate stable, a Central Bank (BCRA) that is gradually rebuilding its reserves, surplus in fiscal accounts .. and so we could continue listing achievements of this administration.

Luis Caputoin Washington, reaffirmed the firm commitment to fiscal adjustment measures. Likewise, he anticipated that inflation for April is likely to remain in single digits, while hinting that the lifting of the stocks is not on the horizon.

All this, added to the banks that returned to working as banks, offering lines at increasingly lower rates, makes some companies begin to think about investment projects and generate new jobs. As an example, a firm that a couple of months ago was going to take a line of working capital at a rate of 75%this week he is implementing it at levels of 36%.

But the main focus of potential investors in Argentina is in the Legislature. The day that Congress manages to approve the first rule presented by Javier Milei, many will see Argentina as a country with high growth potential, which is doing the tasks that were necessary. He May Pact presents a scenario where Argentina would validate all this and confirm the direction that the government is taking (as long as they manage to approve the Base Law).

Financially, they are seeingbusiness missions that takes advantage of the dollars that people have who were looking for coverage in the face of the prevailing uncertainty, and who now want to generate an income so as not to lose with the exchange rate. It is expected that many others will point to this financing alternative and that investors will accompany.

However, there is still a long way to go. Exporters will at some point expect an increase in the devaluation rate (crawling peg) to compensate for the rise in the prices of its inputs in dollars. Today Argentina is expensive in dollars. You no longer see lines in Mendoza of Chileans crossing to shop at the supermarket (on the contrary, Mendoza residents are crossing to shop again in Chile), nor do you see restaurants packed with customers.

You see a stop in the activity that is beginning to worry, an increase in public services that many will not be able to pay, fluctuations in some measures (such as the case of social works) and an uncertainty about the fragility that everything still has.

On the other hand, many maintain that much of the exchange rate stability is due to “blend” through which exporters settle 20% of their exports by selling dollars with bonds (CCL).

In short, the journey of what needs to be done is long. But it is also very good to see what has been done so far. With some errors that will have to be corrected, but with the suitability and conviction of the direction to take.

Corporate Director of PPI.

Source: Ambito

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