The Central Bank of Argentina recently announced a collaboration with international banks to launch a repo loan program worth up to 2 billion US dollars. The agreement is expected to be officially reached on June 11th. Concurrently, the Argentine government plans to introduce a direct dollar subscription option to its public debt issuance plan for 2025.
This initiative is a significant step by the Central Bank of Argentina to bolster its foreign exchange reserves. Previously, the central bank had secured financial support through similar means, including a $1 billion repo loan agreement with five international banks earlier this year. The new $2 billion repo loan will further enhance the country’s foreign exchange liquidity.
The Central Bank of Argentina stated that these operations aim to manage foreign exchange liquidity at a lower cost and are a crucial step in gradually lifting foreign exchange control measures. The central bank also announced that interest rates will be determined by the market rather than set by the central bank as the monetary policy rate.
In terms of monetary policy, Argentina is undertaking major reforms. The country plans to phase out high-interest-rate one-day repo notes and instead use new national bonds as the primary tool for implementing monetary policy. This reform, considered the second phase of its monetary reform, aims to reduce the financing cost of the central bank and increase the flexibility of monetary policy.
Currently, Argentina’s country risk index has dropped to its lowest level in over four years, with a significant decline of over 40% compared to the beginning of the year. The government aims to bring the index below 1,000 points, a key indicator for Argentina’s return to the international credit market.
These measures reflect the Argentine government’s efforts to restore market confidence. By collaborating with international banks and adjusting its debt issuance plan, the country is seeking more stable and sustainable financing channels.
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