January 18, 2018

Difference between two narrows to US$31.6 billion

Friday, July 14, 2017

Ratio between country’s debt and assets slips

The ratio between assets and debt for Argentina abroad deteriorated by 40.5 percent in the first quarter of 2017 in comparison to the same period last year, according to the Position of International Investment report released by INDEC on Wednesday.

Argentina’s investments abroad totalled US$305 billion in the first quarter of 2017 while the country’s debts equalled US$273 billion.

The difference between these two sums left the country in creditor position, having US$31.6 billion in net investments over the amount it owes in debt. Despite the country’s positive position, if this amount is compared to the same quarter last year, Argentina’s net investments fell from US$53 billion to US$31 billion this year.

“When you add debt, it lowers the investment, and furthermore that money is leaving and not staying in the country,” explained Martín Kalos, the director of EPyCA consultancy firm to the Cronista newspaper.

When reviewing the different types of debt owed, the item increasing the most are the “portfolio investments” that contains national debt, which increased from US$69.8 billion to US$128.6 billion. This represents an 84.3 percent growth in the national debt in the last 12 months. On the other hand, in respect to assets, the item expanding the most were the Central Bank’s international reserves which increased 70.8 percent.

In the first quarter of 2016, reserves totalled US$29.5 billion and now they top US$50.5 billion in the first quarter of 2017.

“The increase in liabilities represents the process of indebting the public sector with international investment, although the other side of the coin is the expansion of the Central Bank reserves,” Gabriel Caamaño from theLedesma financial consultancy told Cronista.

The economist highlighted that the new INDEC analysis was another picture of how President Mauricio Macri’s administration was indebting the country.

“The process of issuing debt in the longer term isn’t sustainable. The deficit must be lowered faster but this isn’t easy,” he said.


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