Brazil has one primary budget deficit of 0.5% and pays interest on the debt in the amount of 8.0% of GDPIn short, it has one Deficit financial result of 8.5% of GDP. The reserves are your tax shield and add $360.6 billion and account for 15% of GDP. Brazil’s country risk is 164 points.
Argentina has a budget surplus of 1.7% of GDPand pays interest 1.3% of GDP, In short, it has a financial surplus of 0.4% of GDP. The reserves add up 42,000 million US dollarsand account for 6.4% of GDP. Argentina’s country risk is 568 points.
After looking at this data you could say “Brazil, tell me what it feels like” to have such a large budget deficitHowever, you would answer me that their country risk is only 164 points due to their high reserves. That is, that Brazil has a problem with flows that it hides with reserves.
Argentina has positive inflows but is penalized by the market with high country risk due to its low reserves. Either that or Argentina’s credit history is too strong, causing the market to punish the country with very unfavorable bond valuations.
The Argentine debt and the case of Brazil
The Argentina’s debt stands at $465,353 millionand represents it 66.1% of GDPmeasured by the average dollar over the last 12 months. This eliminates the necessary debts $257,418 million and accounts for 36.6% of GDP. If we take only the debt from private parties (excluding the IMF and multilateral organizations), this amount is $161,876 million and is equivalent to 23.0% of GDP.
Argentina doesn’t have a debt problem It is very low and we only pay interest 8,000 million US dollars per year, The real problem is the lack of trust caused by the horrors committed in the past, which today makes us an unreliable country, although the flow of money is positive, which is a unique case in Latin America.
Brazil has a debt level of $1.77 trillionand corresponds to 78.6% of GDP. Apparently its debt is much higher than Argentina’s. Brazil’s debt is equal to almost five times its reserves and almost six times its exports.
The debts due from Argentina, which adds $257,418 millionincreases the stock of reserves by six times and exports by three times.
The obligatory question is: can we have such a difference in country risk? From my perspective, I don’t think so, because if the numbers don’t agree with you, buy Champion, Argentina has room to reduce sovereign risk and the bonds could rise in proportion, which will give a boost to stocks.
The dollar will not be a business because of the “green rain”.
Argentina’s debt should trade well above current value. The repayment of the government bonds and the repayment of the debt are due on January 9th. $4.3 billion expiresonly of that $3.7 billion goes to the private sectorThe rest remains in the public sector and its payment is made as an accounting application. Of the $3.7 billion The Treasury has already deposited $2,076 million with the central bank. and could buy another $2.2 billion with the pesos deposited there. Relax, we invite you on January 9th.
The government could raise debt against bonds before December 31 or wait for the approval of the 2026 budget to be able to place a long-term bond on international markets in January. We believe that the second alternative is better than the first as it would allow having more reserves and covering the horizon of future debt maturities. This news should reduce the country’s risk.
The Trade agreement between the United States and Argentinathat would be great news to reduce the country’s risk.
The approval of Budget 2026and the law of Tax innocence, This will allow the arrival of dollars in the market and will be crucial for the continuation of the positive trend in the markets in the month of January.
Buy Argentine stocks and bonds are a good investment optionthe interest rate will continue to fall, with the prospect of falling inflation and an exchange rate that has no volatility and is expected to fall, with the potential supply of dollars that we will have via agricultural exports, tax forgetfulness laws, new financing from abroad for companies and the state and the arrival of investments related to the RIGI.
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