Government announces a debt buyback in an environment of ideological blinders

ARGENTINA - Report 19 Jan 2023 by Esteban Fernandez Medrano

Economic Minister Sergio Massa announced that the government would start a debt buyback program for Global Bonds, starting with a USD 1bn target for the short end of the curve, specifically for the Global 29 and Global 30. Given the recent peso weakness, in particular in the informal cash market (close to 375 ARS/USD), and considering that the amortizations of the above-mentioned global bonds do not start until January 2025, added to the BCRA's limited reserve availability, Sergio Massa´s main immediate policy objective is to put a cap on the market FX rate.

But if the objective is to control the FX spread, then why not liberalize service exports? Despite the appointment of Sergio Massa as Economic Minister, the government is maintaining its ideological blinders, implementing emergency, one-shot measures, instead of re-channeling real sources of export and tax flows back into the country.

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