the risk of default and hyperinflation increases in Argentina

The consultancy Economy & Regions has warned that the risk of default and hyperinflation in Argentina is increasing, due to the weakening of its main economic indicators.

The entity said the country is going through a "very serious monetary problem and a very important fiscal problem".

On the monetary side, he warned that there is a "broken BCRA that ensures more devaluation and higher inflation in the future, which (with the current level of repudiation of the peso) implies a risk of hyperinflation.

"The relevant liability in the development of monetary policy is more than three times higher than that of freely available reserves.Budgetically, with the closure of international financial markets and consumption of IMF financing above 75 %, the financial program 2020 -2023 seems very difficult to finance, and the risk of default emerges, "said the consultant in a report.

He baderted that "there is a ruined central bank, which leads to further devaluation and inflation, generates a decline in money demand, lowers the ceiling to the peso (dollar) and increases the debt-to-product ratio, which is reflected in an increase in the interest rate and the cost of capital. "

"Without growth, not only can resources not be generated to pay down debt, but an increasingly large primary surplus is needed for debt to be sustainable in the meantime," said Economy & Regions.

He pointed out that "the combination of greater debt, higher capital cost, greater economic decline and greater primary surplus eventually makes the unsustainable debt on the social level ".

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