The country's irrigation has been eased, but in one year, it has grown more than that of Venezuela

Why country risk, the index that measures the proximity of a default country, has increased in recent days in Argentina?

Salvador Di Stéfano explains in an article bearing his signature in the newspaper Ámbito Financiero: "The markets are wary of the presidential election of 2019, two opposing projects are diametrically opposed, and if the winner does not have any external financial badistance, debt maturities can hardly be met." In this scenario, many investors sell government securities. They emigrate dollars abroad, which leads to a drop in the price of bonds that results in an increase in country risk ".

In the same spirit, said Arnaldo Bocco, former director of the Central Bank: "Country risk is increasing because foreign bondholders, who are interested in macroeconomic sustainability and are getting rid of Argentine bonds and securities, are losing value, which means that trust has disappeared from investors."

During the government of Mauricio Macri, the index prepared by JP Morgan peaked in December 2018, reaching 834 basis points. This Thursday, it was around 813 points, giving positions to 818 marked at the end of the day..

Beyond the relief, the local country risk has increased by 135% since January 2018 and is the one that has risen the most compared to other emerging countries and even urgently, as Venezuela, notes a report from the Public Policy Observatory of the National University of Avellaneda (UNDAV).

According to the document, Argentina's default risk has increased by 99.8% in the last 12 months, even exceeding Turkey (43.7%), Venezuela (28.1%) and Ukraine (25%). , 4% and South Africa with 25.2%.

"It is also observed that in the region, Argentina has not suffered from serious deterioration, Mexico has only grown by 9.4% in one year, Uruguay, 5.6%, Colombia, 2.9%, Brazil and Panama., Both with 2%, and with decreases in Peru and Ecuador, -19% and -1.6%, respectively "adds the UNDAV report.

"The increase in risk implies that Argentine debt securities pay a surcharge in relation to the
rate going back to the US Treasury which are supposed to be the safest badets. This surtax not only increases the possibility of debt, but also has a negative effect on expectations that show that the national economy is far from the performance of previous years. "he adds.

Each 100 basis point country risk increase increases the US bond yield surtax by one percentage point, about 2%. That is to say, the current 813 points represent 8.13 percentage points, so an Argentine bond should offer a yield of 10.13%, a high rate, when other countries in the region manage to put the debt at 4%, for example.

This is why the government has ceased to have access to international markets and is relying on the IMF, which offers better debt conditions in terms of rates, but which requires an adjustment that, in the short term, no longer generates a recession.