Will the new Extended Fund Facility work?
The negotiations with the IMF took longer than most people anticipated. Argentina wanted a USD 25 billion program while the IMF probably had in mind half of that amount. There were also discussions about the size of the upfront disbursement, as Argentina was requesting more dollars than the IMF was willing to provide. At the […]
A Tag of War Between Argentina and the IMF
The government is losing momentum, and it now appears unlikely to have a smooth path to the October elections. After a first year in which everything went according to plan on the economic and political fronts, the outlook is gloomier due to some unforced errors and deteriorating financial conditions.
Some hurdles on the way to the election: From Libra to higher country risk
Until now Milei’s image appeared to be bulletproof. Though recently, some of his statements generated criticisms that affected his image. It all started with an unfortunate dissertation in Davos, where he was aggressive with minorities. However, the biggest controversy came from a tweet in which he promoted the token Libra. The price of Libra skyrocketed […]
What to Watch in 2025 on the Way to the Elections
The international environment is changing rapidly and does not seem to bring the tail wind that Argentina needs. At first glance Trump appears to be good news. This is clearly the case when it comes to providing support in the negotiations with the IMF, as he did with Macri. A call from the White House […]
From the Year of Living Dangerously to Milei in Wonderland
2024 started as “the year of living dangerously” and ended as “Milei in Wonderland”. Of course, we are not in wonderland yet, but the year is ending on a high note and much better than almost anybody would have imagined.
The October financial rally: temporary upswing or turning point?
Just a few months ago the concern was that the parallel exchange rates were again skyrocketing and that the country risk was returning to astronomical levels. Something happened along the way and in the last weeks we have seen a tremendous rally in stocks and bonds, the exchange rate has stabilized, and the spread dropped […]
“Adjustment fatigue” is beginning to set in
The government confronts a more difficult political climate. However, it benefits from the fact that no one in the opposition is able to capitalize the moment yet. The index of confidence in the government dropped 15% in the September measure, while the index of consumer confidence fell 5.9%. Another bad news is that 52.9% of […]
Milei had a tough month in Congress, but public support remains high
President Milei has had a terrible political couple of weeks in Congress. The Senate voted with an overwhelming majority to change the formula to adjust pensions. This would cost money this year and next, although through a good ruling it may not be too bad. Milei promised a veto but given that the bill passes […]
FX restrictions, the thorniest issue at stake
With the approval of the Ley de Bases and the signing of the Pacto de Mayo in Tucumán on 9 July the government seems to have completed the first stage of the program. The main objectives were to achieve fiscal balance, to bring down inflation, to liberalize most prices, to eliminate the import permits, to […]
FX policy, between a rock and a hard place.
Finally, Milei is getting the approval of the first laws: the “Ley Bases” reform bill, and the fiscal package. This is an important political victory, and it indicates that when push comes to shove, he is willing to compromise. Much of the merit goes to his new Chief of Cabinet, Guillermo Francos, who proved to […]