The government of Argentina says it cannot increase the value of its repayment offer to the country’s creditors because “we are not 100% confident that we can afford [what we have already offered].”
An unnamed government official tells Euromoney that the deteriorating economic and fiscal situation in Argentina – which has already suffered two years of recession before this year, when Covid-19 is expected to see a further 10% contraction of GDP – has complicated its ability to model the sustainability of its current offer, which is worth roughly 53 cents on the dollar.
“Argentina has implemented a fiscal programme [in response to the pandemic] worth about 3% of GDP, and we have seen a fall in revenues worth about 2% of GDP,” he says. “However, we didn’t change our proposal [to creditors] because we thought we had buffers to have a recovery. On the other hand, given where we are now, it’s maximum offer we can make.”
The official’s comments play to the growing views of many within the Buenos Aires finance community.
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| Juan Manuel Pazos, TPCG Valores |
“The government and bondholders are both assuming that the Argentine economy is going to rebound in the coming years – that a $300 billion economy is going to become a $400 billion economy in the next five or six years,” says Juan Manuel Pazos, chief economist at TPCG Valores in Buenos Aires.
