Javier Milei was elected as the new President of Argentina last Sunday the 19th
The Argentine Minister of Economy, Luis Caputoand the finance minister, Pablo Quirnopresented a proposal this Friday the 5th to representatives of local and foreign banks operating in the region Argentinain which the Argentine President, Javier Mileiproposes converting more than $71 billion worth of domestic debt into pesos. The Argentine government's aim is to stabilize the economy with this measure. The intention is to issue new bonds denominated in pesos starting in February to be exchanged for maturities in 2024, which could result in the largest increase in domestic debt in the country's history. Caputo and Quirno said the debt swap would be voluntary and the bonds would be tailored to the banks' needs. As a possible alternative to the swap, the proposal envisages the issuance of inflationindexed bonds with maturities in 2025, 2026 and 2027. The aim is to place the securities at market prices.
The debt payments of the Treasure Argentina's national currency is estimated at 57.5 trillion pesos this year (equivalent to $71 billion at the official rate). This debt includes bonds with interest payments linked to inflation, exchange rates and fixedrate bonds. The debt conversion proposal complements measures Milei took in his first month in office, such as devaluing the peso by 54% and making drastic spending cuts to correct chronic deficits and inflation.
Argentina faces pressing challenges, such as paying nearly $1 billion in interest to creditors Wall Street next week and a court decision in a $16 billion case involving the state oil company YPF. Despite the devaluation of the peso in December, the central bank managed to recover around $3 billion in foreign reserves and narrow the difference between official and parallel exchange rates. However, investors are concerned about the sustainability of Milei's policies and expect increasing pressure on the Argentine currency in the coming weeks.