Anchors Before Debt: Why the Government Misses Another Opportunity to Return to Markets

The current level of country risk has reopened a question that has been hovering over the city for several weeks: Why hasn’t the Government returned to the international debt market yet if financial conditions have significantly improved for Argentina?

In the Ministry of Economy, they seem to understand that it is still not the right time. Rather, the official strategy consists of first consolidating the anchors of the economic program and only then taking advantage of a reopening of external credit. Specifically, the team led by Luis Caputo believes that issuing now would imply validating a financial cost that is too high when there is still room to continue reducing the country risk.

This reasoning was reflected in a recent presentation by Criteria, of which Ámbito was a part. There, specialists reviewed the roadmap of the economic program and hinted that the market is still not fully rewarding the improvement in macroeconomic fundamentals.

The explanation begins with the fiscal front, where the recent number was "unexpected," according to Head of Research & Strategy at Criteria, Gustavo Araujo, referring to the June results. Indeed, he clarified that "there is some exhaustion regarding how to achieve the primary surplus" on the part of the Government, but emphasized that the fiscal anchor is one of the "non-negotiable pillars" of the economic program.

In this line, the report highlights that Argentina has managed to maintain a fiscal surplus for more than two consecutive years, a regime change that allowed for the elimination of fiscal dominance over monetary policy, cleaning up a good part of the balance of the Central Bank (BCRA) and accompanying a strong deceleration of inflation.
Evolution of fiscal results. Criteria

In this regard, Araujo assured that "the market discounts monthly inflations below 2% for 2027", an expectation that explains part of the renewed interest of investors in Argentine assets.

The Government's Financial Plan

Regarding the 2026-2027 Financial Program presented by the Government, Araujo highlighted that it was "very well received by the market". The official roadmap foresees covering financing needs without resorting, for now, to a sovereign issuance in dollars.

According to the Criteria report, the financial program for 2026 is already completely covered and even leaves a liquidity cushion to face part of the commitments for 2027. The real challenge will only appear next year, when maturities increase and the need to access external financing again arises.

"The Government's intention is to eliminate any possibility of default", Araujo stated. For this reason, he added that "the Government is not interested in validating current rates and going to the market despite the drop in country risk".

The reading within Criteria is that possibly, the improvement of Argentine credit is not over yet. "We do not believe that money flows will settle on Argentine sovereign debt in dollars, at least until the electoral landscape for 2027 clears up," he explained.

For his part, Flavio Castro, Asset Management analyst at Criteria, quantified the official prudence: "If Argentina went to the market today, the rate would be between 8% and 9%".

Waiting Also Implies Costs

Not everyone, however, believes that the strategy is free of risks. In an interview with Ámbito, economist Federico Glustein agreed that the government has reasons to avoid a premature placement. "It is right not to want to validate a rate that is too high for a large issuance," he pointed out.
With the yield on the 10-year U.S. Treasury around 4.6%-4.68%, he explained that an Argentine sovereign placement could still end up paying a rate higher than 9% annually, once the risk premium and the cost of a new issuance are incorporated.
However, he warned about the other extreme. "There is also a real risk if one falls in love with the idea of waiting for the ideal market rate," he stated.
For Glustein, as long as the Treasury can cover financial needs through multilateral organizations, privatizations, local dollar issuances, and its own cash flow, the decision to postpone going to the market seems reasonable and, in fact, aligns with the strategy proposed by Minister Caputo.
Despite this, he recalled that the financial calendar will be more demanding heading into next year. "Argentina faces a wall of over $32 billion in foreign currency maturities in 2027, including interest, right in a complex electoral year, and will have to resort to significant financial engineering to meet its obligations," he pointed out.
The Dollars, the Other Front

While postponing the return to Wall Street, the government of Javier Milei faces another less visible challenge: the growing private demand for foreign currency. The lifting of the currency controls, the recovery of activity, and financial normalization have started to increase dollar consumption through multiple channels. "The repatriation of dividends from foreign companies is a dollar-consuming machine," summarized Araujo.

Dividend repatriation by companies.
Criteria
From Criteria, they maintain that the challenge is to ensure a solid financial program in hard currency, while the BCRA accumulates reserves thanks to contributions from agriculture, purchases in the Foreign Exchange Market (MLC), and the increasing access of companies to external financing.
In this scenario, Araujo emphasized that "agriculture still has a production potential of 40%", while warning that the development of the capital market still shows a strong sectoral concentration: "There are not as many bonds from mining companies as from oil companies."
The other side of the economic program is that the recovery remains uneven. "There are losing sectors" in which the government "will not get involved," said the executive, referring to areas such as the textile industry, which continue to lag behind the dynamism shown by agriculture, energy, and mining.
External Front and Global Context

To this domestic reality is added a more complex international scenario. "The global market is completely divided; we will have to get used to living with more volatile interest rates," stated Nicolás Max, director of Asset Management at Criteria.

"I believe the market is more efficient than the Federal Reserve (Fed) when it comes to economic projections," added the executive, while dismissing the idea that Kevin Warsh taking the helm of the U.S. central bank implies a leadership conditioned by President Donald Trump: "Warsh is not a puppet."

With long-term rates in the United States still elevated and international financial costs remaining high, officials at the Treasury Palace believe that there is no urgency to return to the market. The official bet is that time will play in their favor to arrive with a lower country risk, greater accumulation of reserves, and inflation consolidated below 2% monthly before reopening the door to voluntary credit.