Sergio Massa negotiates a loan with international banks to strengthen reserves

Before stepping down this Tuesday from the presidency of the Chamber of Deputies and presenting his economic plan at a press conference on Wednesday, Serge Massa streamline negotiations with a group of international banks to obtain what is called “repo” in financial jargonto make dollars that support the meager reserves of the Central Bank.

The Economy Minister has reportedly advanced negotiations with three international banks and a sovereign investment fund of the United Arab Emirateswhich could be interested in granting a loan to the country, at a rate that Argentina cannot obtain today to finance itself and in exchange for some guarantees, taken as collateral.

A repo is a common operation in the banking world, where investors buy securities in cash and manage the operation in reverse with a certain term and interest. Argentina could offer Treasury bonds “at a discounted price” and thus reach a rate level at which the country, due to its financial profile, it cannot enter the international market.

The terms of the proposed agreement with the banks are not yet known. as far as he could tell Clarione, the negotiated repo would have a duration of six months, which could be renewable in the future. As collateral for this type of loan, international entities could take stock from the Anses Sustainability Guarantee Fund or public debt securities.

The strategy aims to consolidate the Central Bank’s battered reserves. The monetary authority got rid of $ 1.275 million last month on the foreign exchange market and ended the worst July month in two decades. On the market, they estimate that the plant’s net reserves have fallen to an average of $ 1,300 million.

Increasing the firepower of the body chaired by Miguel Pesce is essential to consolidate the decline in parallel dollars and reduce the exchange gap. This is what the market is asking for and it is what has been agreed with the Monetary Fund: The target that was set with the agency for the third quarter of 2022 is $ 6,300 million.

According to sources familiar with the negotiations “We proceed at all levels” to unblock the immediate disbursement of bilateral loans approved by the Inter-American Development Bank (IDB) and withheld due to the country’s poor relations with Mauricio Claver, its president.

For this reason, in addition to trying to get these 800 million US dollars from multilateral organizations, the government would advance with this strategy to get a cushion of dollars and avoid a moderate devaluation of the exchange.

“This is a healthy strategy, but one that Martín Guzmán has refused to use many times,” a man who consulted with the new minister told the newspaper. Central Bank sources said they were unaware of these negotiations

Massa will leave in mid-August a tour in the United States and France, to strengthen international support, which will also bring him to Qatar. The objective of the first part of the road show is to meet the representatives of the IMF, the World Bank, the United States Treasury, the IDB and the most important investment funds. Subsequently, the entourage, which would also be composed of Silvina Batakis, would travel to France to meet the authorities of the Paris Club.

AQ