In dialogue with Channel Ethe economist, Jose Castilloa specialist in public sector debt and finance, explained why the country is falling back into the debt trap and warned of the impossibility of covering the most urgent payments.
Lock He claimed that Argentina was not starting a new debt cycle, but that “continue in a new chapter“a structural dynamic that cannot be reversed. As he explained, the situation has become more complex because the government announced months ago that it would only issue debt when sovereign risk fell to 300 or 400 points, but this scenario never materialized. Today the reality is different: “We’re still over 600“, he remarked.
Lock He pointed out that even in this context of high interest rates, the government would be forced to enter into a bond with local legislation in 2029 to raise dollars. The official goal is to raise at least $1 billion, but the minimum rate “will end at around 9%“, which the economist calls “very expensive“.
A guilt forced by the urgency of January
For Lockthe explanation is clear: it is not a sign of market confidence, but an extreme necessity. “Is it a virtue or a necessity? Many of us consider it a necessity“, he explained. He also recalled that the last sign of support from the United States was related to the electoral process: “This was for electoral intervention; Now get ready“, he explained.
The economist described the current situation in detail: “In January it is pricelessAccording to him, the country needs between $4,200 and $4,300 million “in cash or refinanced,” and as of today “The money is not on the tableHe ruled out that these funds come from the IMF or the US Treasury and assured that the government is trying “however, shrink” this number by turning to local markets, redevelopment and a desperate search for financing.
A risky bond and ever weaker debt
Lock He explained that the bonds issued are not subject to international legislation as the country is unable to attract lenders from abroad. These are local law securities that would be purchased mainly by banks and investment funds due to recent changes by the Central Bank. For this reason he described the operation as “a new debt cycle, but much more fragile“.
Regarding the introduction of the bonus, Lock He defined it bluntly: “It’s a desperate measure“He doesn’t see it as a financial success, but rather as an instrument for”collect part of the amounts due in January“Advance other due dates.”When the film reaches this place, there is no other“, he reflected.
The economist also questioned the lack of foresight: the government had a full year – between IMF disbursements, crop recovery and agreements with the United States – to rebuild reserves and failed to do so. Therefore, he concluded that Argentina “is on a tightrope” with maturities that will continue to put pressure on the exchange rate and the state’s solvency.
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