ARGENTINE MARKETS-What do analysts say? Week of January 31 to February 4

BUENOS AIRES, Jan 31 (Reuters) – Analysts weigh in on Argentina’s economic future after President Alberto Fernandez announced that the country and the International Monetary Fund (IMF) reached an agreement on Friday to restructure debt payments exceeding the 40,000 million dollars.

The understanding reached, which will give the country a break in the midst of a prolonged financial crisis, must be approved by the Argentine Congress and by the IMF board.

After the announcement, the bonds of the South American country soared, the country risk fell and the pressures on the foreign exchange market decreased.

* “Normally there is no pre-announcement (…) what there is is an announcement when the technical negotiation has already been completed, but in this case, given that the payment was going to be made and given such tight times, They made this statement, which is very important because it was discussed at the Fund’s board of directors, which represents 190 countries,” Claudio Loser, former IMF director, said in radio statements.

“I see that (the agreement) could be put together in no more than a month, it may already be well written, surely there is a draft letter of intent, numbers must be put in and many things must be detailed,” he added.

* “Undoubtedly, the principle of understanding between Argentina and the IMF brought some calm to the markets and prevents the precipice in the short term. However, it is very difficult for it to help radically change expectations and provide a shock of confidence” said Roberto Geretto of Fundcorp.

* “The announcement of important progress in the agreement with the IMF allowed a recovery of Argentine assets by eliminating the possibility of arrears, which was very present during the week,” said Delphos Investment.

“Agreements on the pace of fiscal consolidation and monetary issuance are achievable with higher rate adjustments than announced and increased financing in the local and foreign markets,” he added.

* “The full details of the agreement have not yet been made public, and this is only the first step in the approval process required by both Argentina and the IMF,” said Gabriel Torres Moody’s Investors Service.

He added that “the fulfillment of the goals established in the program, in particular the reduction of the fiscal deficit and the monetary financing of the Central Bank, will represent a major test of Argentina’s will and capacity to make important adjustments to the current framework of economic policy”.

* “Based on the understanding with the IMF, operators will continue to be attentive to eventual adjustments in ‘crawling-peg’ strategies and to the balances of interventions in reserves, seeking to stop the drainage of recent times,” said Gustavo Ber , economist at Estudio Ber.

“The positive initial reaction was also present between the financial and free dollars, which exhibit a moderate contraction after the upward readjustment as a result of the uncertainty, and thus the ‘gap’ remains very high while the effects of the agreement”.

* “The macro-financial picture shows deep imbalances and pervasive distortions that make a gradual policy tightening strategy inherently risky,” said Alberto Ramos of Goldman, Sachs & Co.

* “We are cautiously waiting for clarifications. The specific contents (fine print) of the Letter of Intent and the agreement with the staff that must be approved by the Board (final agreement) are still missing,” said the consulting firm ABECEB.

He added that “there is also a need to manage internal support (from the left wing of the government coalition) so that Congress endorses the agreement. And then, Argentina must comply with the commitments assumed, which will not be without challenges given that the agreement with the IMF is a first step, but it does not solve the macro imbalances or the problems that Argentina brings”.

* “Although the agreement has not yet been formally signed (there are technical negotiations, bureaucratic steps and ratification in Congress) it is a sign that clearly increases the chances that it will actually materialize during this quarter,” estimated the consulting firm Ecolatina.

“One of the objectives of the announcement was to decompress a financial front that was convulsed by the high uncertainty,” he said.

(Reporting by Walter Bianchi; Editing by Nicolás Misculin)

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