Buenos Aires Times

Economy in brief: Bond sales, soy, gas and growth

This are some of the main stories from the last week.

Sunday 7 January, 2018
Producers were expected to plant 16.8 million hectares of soybeans for Argentina’s 2017-18 crop.
Producers were expected to plant 16.8 million hectares of soybeans for Argentina’s 2017-18 crop. Foto:AFP.

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GOVERNMENT SEEKS TO ACCELERATE NEW BOND SALES

Reports by Bloomberg suggested this week that the government is seeking to jump ahead of Mexico and speed up a plan to offer a US$10-billion bond sale, with a target of this month. According to the report, government officials are in the process of appointing banks to handle the sale, which would take place in the first half of this month. Bloomberg said that Mexico was also seeking to offer 10 or 30 year bonds and that “the race is on to secure foreign investors who have shown appetite for emerging-market debt.”

Finance Minister Luis Caputo will oversee the offering, with the sale likely to cover a third of the total financing the government will seek to bring in through markets this year. Bloomberg also reported that Buenos Aires province will follow suit, offering as much as US$3 billion in a subsequent offering.

BOLIVIA’S MORALES WANTS GAS TALKS WITH MACRI

Bolivia’s President Evo Morales is hopeful he will finally sit down with his President Mauricio Macri in February, the Bolivian leader said this week. Argentina has already suspended planned talks twice, yet Morales is said to be eager to bring Argentina into the fold on plans to construct a 3,500-kilometre trainline across Bolivia from the Brazilian port of Santos to the Peruvian port of Ilo. The project will cost between US$10 billion and US$15 billion. La Paz is also keen on expanding energy exports, one of Bolivia’s key trade areas with Argentina. The Andean nation exports between 14 and 16 million cubic metres of natural gas to Argentina each day.

Relevant contracts stipulate that this is to increase gradually to 27 million cubic metres. Bolivia is also keen on signing export deals for energy derivatives and electricity.

MACRI: “WE WILL EASE OFF DEBT FINANCING”

The national government is working toward an economic future characterised by less debt financing and greater productivity, President Mauricio Macri declared on Tuesday. “We want to ease off debt financing and avoid our children and grandchildren having to pay (the debt). Each and every one of us has to work toward living within our means. We should try to save money, in order to clear a safer path for our children and grandchildren,” he said, visiting a wind farm in Chubut province. “We said that we would kickstart the country, and that’s what we’re doing. We’re paying retirees, mortgages are again available. But each of us, public servants, need to administer our resources with care, with balance,” he added. In line with similar expressions emanating from the national government after the December 28 announcement of a softer inflation target for 2018, Macri said he was optimistic about the country’s economic future. He pointed specifically to the 15-months of consecutive growth the country has experienced. “The year 2018 will be a great year for Argentina”, he said.

IMF PREDICTS 2.5% GROWTH IN 2018

The International Monetary Fund (IMF) has predicted that Argentina’s economy should “slowly pick up in the coming years.” In a report outlining its forecast for the country’s economic future, the IMF predicted a growth rate of 2.5 percent for 2018, one percentage-point less than the government’s own forecast in next year’s budget. The report, coinciding with the last working day of last year, foresaw a final economic growth rate of 2.8 percent in 2017, up from the 2.5 percent it had expected in October. It also raised its outlook for the country’s current account deficit to 4.3 percent of GDP in 2017 and 4.4 percent in 2018, from a previous 3.6 percent and 3.7 percent respectively. Overall, the entity’s analysis of the national government’s economic policy was positive. “The government has unwound multiple distortions and made important progress in restoring integrity and transparency in public-sector operations,” it said in its 2017 Article IV report. “These policy changes have put the economy on a stronger ooting and corrected many of the most urgent macroeconomic imbalances.”

ANNUAL TAX REVENUE FOR 2017 TOTALLED 2.5 TRILLION PESOS

AFIP announced this week that annual tax revenue for Argentina totalled 2.537 trillion pesos (approximately US$136 billion). The tax agency said revenue in December was 235.21 billion pesos, or just over US$12.5 billion.

SOYBEAN PRICES RISE AMID WEATHER FEARS

Soybean prices rose this week in the United States as fears rose over supply from Argentine producers in Buenos Aires province and the pampas. Recent dry spells, including this week’s dry weather, has left some of the country’s farming areas in need of rain. Argentina is the world’s thirdlargest supplier of unprocessed soybean and the top global exporter for soymeal livestock feed. “In most of Buenos Aires the rains were slight to non-existent,” Natalia Gattinoni, a meteorologist with the state-run INTA farm technology institute, told Reuters, in reference to the weekend and Monday. “There is a lot of talk in Chicago about the weather in Argentina, where there is still dry weather that could lead to a smaller harvest than initially expected,” said Mike Zuzolo, of Global Community Analytics, in conversation with AFP.


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