The Ministry of Economy advances in the negotiation with a group of banks to obtain financing through a REPO scheme that will serve to “guarantee the payment of the principal of the bonds that mature next January”as confirmed by a high source from the Treasury Palace to Scope.
This is collateralized financing – for an estimated amount in the order of 3 billion dollars – which will be done, official sources say, at “a much lower rate than the one the Government would have to pay today if the bonds were refinanced in the market.”
The Central Bank is carrying out the REPO (repurchasement agreement) operation consisting of a loan agreed with financial entities for Argentina.
“The only thing we have to guarantee is the interest. We already have the REPO set up for next year, in case we want to go on the market and we don’t manage to ‘roll’, we have the REPO to cover. That is, we pay as be it,” President Javier Milei stated weeks ago.
In market circles it is considered that with these financings the possibility of a short-term exchange rate adjustment is removed. It is interpreted that the Ministry of Economy does not plan to abandon the crawling peg scheme in the short term and focuses on bringing inflation to a devaluation rate of 2% per month.
This does not mean that the horizon is free of risks, analysts warn – it is enough to point out that the Central Bank’s net reserves are negative in the order of 5,000 million dollars.
Meanwhile, the Government is also advancing the dialogue with the International Monetary Fund (IMF) to complete the ninth and tenth program reviews.
“The Fund program ends at the end of the year. Depending on how the variables of the economy evolve, we will request a new program or not. If we ask for a new program it is with the objective that there are new disbursements. We haven’t decided yet“said the Minister of Economy, Luis Caputo, in statements made days ago.
In the market it is interpreted that, with the REPO operation, the Treasury Palace will have more margin in its negotiation with the IMF.
Source: Ambito
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