A new exchange, a new possibility

By Guido Lanzillotta. November 2020.

Argentina brings an economic and political history, which shows us why society, largely, is reappearing to the capital market.

The aim is to focus on how important it is for a country and its development to be clear how, through the country risk and the tools that the capital market offers us, the years can be carried over efficiently.

Argentina brings an economic and political history, which shows us why society, largely, is reappearing to the capital market. Its continuous cycles of entry and exits to different economic crises, and the lack of unity in public policies build a conjunctural mistrust that rebounds in investors negatively. This is causal, to a large extent, to make it impossible to develop efficient tools through the capital market that can be useful to companies, investors and the government.

The priorities of Argentina as a country are quite. And the emergencies we have even more. Not to mention whether we are in a pandemic context. But we must have (those who believe in the positive role of the capital market) the insistence of putting ideas and solutions that can contribute in the medium and long term.

Although there are no negotiations with the IMF, we can anticipate the need to clarify the fiscal ground for the future. This is the structural factor that will actually allow to lower the country risk, or at least keep it with a downward trend.

In a world of excessive liquidity and low rates, and punctually in a high-emission Argentina, we should not lose sight of the virtuous circle that we can generate after this exchange of debt by capturing the external and internal flows in shareholders instruments.

Know that they will be in the portfolio of the sustainable guarantee fund and the BC a considerable amount of Argentine obligations, can invite us to believe that the state can be part of it and not only to show firepower and to repercussion on the exchange expectations of the MEP and CCL dollar (a short-term solution), but also to further with more emphasis the use of public bonds as working tools.

The obvious question is who would like to receive a debt title with such antecedents, tied to a change in the permanent game rules. That is where the tax benefits, the indebtedness accessible to private projects through these obligations and their use as a means of payment in the state and private archaees should be ideas that do not late in practice.

Understanding that the debt with counterparts is not bad, that the state must promote debt as an investment and self-financing mechanism, and that, both institutional and individual investors can resort to it (to make their taxes more efficient, private debt and savings more efficient) has to be a premise that will be fulfilled, will generate positive virtuous circles in favor of Argentina.

If private companies award their employees with shares of the same company: Why can't we think that executive, legislative and judicial power can through scales do it with its employees? Why can't we invite companies and investors, regardless of their size, to have predefined government scales (which do not harm the state's annual budget or private ones) to choose to pay taxes or replace Argentine bonds, with the condition that they are held until the end of their life? Why can't we think of mixed financing mechanisms for SMEs where banks deliver part of money and part of bonds to make them use of guarantee and finance themselves in an accessible way through stock exchanges respecting the necessary quotas? It's just a few questions I ask and I invite you to think out loud.

The demand for Argentine bonds and their alternative to use in different areas and as a counterpart for different purposes we see that it can generate a positive impact on the following financial aspects: Greater exchange stability, greater weight absorption that does not necessarily end its conversion to MEP or CCL Dollar, greater access to finance large and medium-sized enterprises, greater fiscal discipline and by ende greater collection, greater funding resources for the state, avoid relying only on an international market to access credit, strengthen the internal market and its financing mechanisms, by mentioning some.

In turn, we see that, as a counterpart, an effect will be erupted at the level of society: there will be an implicit social pact of social actors who have to a greater or lesser extent these securities (common objective), there will be a greater culture of expenditure and savings and the focus of attention on political emergencies with a more financing alternative, thus leaving the ongoing discussion of debt to us with monetary or external debt.