Editorial: Can Argentina End Up In Another Debt Restructuration?
With Argentine bond yields approaching 20% a year, some begin to wonder if Argentina will have to restructure its debt again, despite the fact that the agreement with bondholders was closed just six months ago. There is no single answer, but common sense says that Argentina is unlikely to be forced to renegotiate its liabilities (beyond the IMF) before 2024 or 2025, since the maturities in foreign currency are simply negligible. And even so, the maturities with the foreign currency market are 3 billion dollars in 2024 and slightly more than 6 billion in 2025 and 2026, that is, 1.5% of current GDP. It is difficult to think of a default unless one has a very negative scenario in mind.
A Bittersweet Year for the Agricultural Sector and the FX Market
The harvest will be at least 9% worse than 2020 and 13% worse than 2019 with the risk of marginally worsening. However, the rise in prices will cause exports of agricultural products and derivatives to grow by about USD 9 billion dollars. This means that the Central Bank can buy around 4 billion dollars and that the revenues from tax grow by 0.7% of GDP.
More Bad News Than Good With Inflation
Inflation in February was 3.57%, down from 4.05% in January and somewhat lower than the 3.9% we expected in Econviews. Core inflation (4.1% vs 3.9%) and seasonal inflation (3.1% vs 3.0%) rose slightly, but thanks to lower inflation in the prices of regulated goods and services, that grew only 2.2% compared to 5.1% registered in January, the CPI could slow down. In any case, what sets the trend is core inflation and this was the second highest since Alberto Fernández took office.
REM versus Econviews: Similarities and Differences
At Econviews we are in the habit of debating projections. We look at consistency, we use models and our analysts’ experience to reach an internal consensus. Of course we also like to compare with what the rest of the profession thinks. Here is a summary of our projections and the differences and similarities we have with the markets, based on the REM monthly survey carried out at the Central Bank.
Econviews Weekly March 15th 2021