The Fiscal Deficit, Stupid

ARGENTINA - Report 13 Mar 2015 by Esteban Fernandez Medrano
Executive Summary In this report, we update the concerns presented a year ago in our report “Dangerous Monetary Arithmetic”. We go into detail with regards the monetary implications of a rising fiscal deficit and the sustainability of the Central Bank’s sterilization cost. The Central Bank sterilization policy allows the Treasury to delay a fiscal stabilization program and to elude international capital markets. Issuing short-term debt, allows the BCRA to further aid the government with monetary financing, extending the “due date” of its “capital-market-independent” financing strategy. The ...

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