Economist Alejandro Barros explained that stabilizing the exchange rate and increasing the peso's role in Argentina's economy will further reduce country risk. Barros stated that eliminating distortive exchange rates is key to this trend. The government celebrates the current drop but prioritizes reserve accumulation before returning to debt markets.
Economist Alejandro Barros, in an interview with Canal E, analyzed the recent dollar stability in Argentina's economic agenda and its impact on country risk. Barros stated that "the exchange rate, to the extent that it stabilizes and the country's currency begins to have more predominance in the entire economy, leads to lowering the country risk." He highlighted the peso's strengthening in local transactions as a condition for reducing risk perception.
Barros clarified it's not the only factor: "It's not the only effect, but also the devaluation is lower." He added that "to the extent that these distortive exchange rates are eliminated, the country risk will go down more." He explained that exchange controls create additional costs for companies, such as paying premiums to transfer dollars abroad, which affects profitability and raises risk.
"To transform dollars into viable dollars for transfer abroad without any restriction, I need to pay a premium that ultimately is a loss for companies that have dividends or need to make purchases abroad," he said. Barros defined the distortion as "the differential exchange rates that force the Government to liquidate foreign currency to companies."
Meanwhile, the government celebrates the drop in country risk, partly attributing it to a favorable external context for emerging markets. However, it rules out returning to the international debt market in the short term, prioritizing reserve accumulation. In parallel, progress is expected on the second review of the IMF agreement.
