The partial normalization of economic policy in Argentina – as the government chases a deal with the IMF – has led some international analysts to see a floor in the country’s recent financial crisis.
Bank of America’s Sebastian Rondeau says that the macro outlook “has improved significantly amid declining Covid, policy improvement and IMF talks” and he asks if the country has “rounded the corner”.
It is an open question.
GDP continues to recover – the official monthly economic output index jumped 1.9% in September, with August revised up to 1.6% – and the decline in the country’s international reserves has slowed.
Meanwhile, the parallel FX gap between the official and unofficial blue rate has fallen to 79%, compared with a peak of 130% in October.
Credit Suisse cites these improving macro factors as leading to a lower cost of risk for Argentine financial institutions. A report led by Alonso Garcia at the end of November upgraded two of the three Argentine banks the bank covers.
Its more constructive view on the sector is driven by the government’s decision to strengthen its fiscal policies (that is, to stop financing its budget from the central bank; break the country’s pensions indexation; and suspend its Covid-related fiscal payment programme and better-than anticipated deficits targets for 2021).
