How To Start My Period Pressure Point

from Climate Change Capital Output totaled U.S. $ s14.900

By Ramiro Castiñeira

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The best the international context, coupled with the expectation of imminent debt swap and a good crop for this year are the main factors that allowed reverse expectations for 2010 and subsequent slow the steady outflow of private capital. This despite the disappearance fiscal surplus in 2009 , one of the pillars of the post macroeconomic convertibility.

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In fact, after two years where the formation of foreign assets by the private sector totaled U.S. $ s43.000 billion (at an average rate of $ s1.800 million per month) portfolio dollarization began to diminish significantly in the second half of 2009, to almost complete halt in the last month year.

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In fact, according to official figures the Central Bank bought U.S. $ s988 million in the first three weeks of December. Assuming that the last week of the year to keep pace as the previous order, ending the month increased reserves by $ s1.300 million, slightly higher magnitude we expect the trade surplus for the period.

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words, do not fall private capital, not out as in the past, allowing the Central Bank to increase its reserves by buying the entire trade surplus for the period.

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Thus, we estimate capital flight in the last three months of the year would not exceed $ 700 million (giving a monthly average of less than $ 250 million), which would end 2009 with a capital outflow of U.S. $ s14.900 million. While the magnitude is significant, it is 35% less than the $ s23.100 million in 2008.

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However, it warned of structural change that left the local crisis in macroeconomics: the disappearance of the fiscal surplus. The three points of GDP surplus is a fact (and record) the past. Net income from temporary IMF this year the Government closed without primary surplus and our projections do not assume that to recover in 2010. In fact, everything tells us otherwise.

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If in this new context, markets are optimistic for the future, responding to bet that the government restore access to credit, and meanwhile BCRA reserves used to meet the debt service . Of course, the debt to reserves of the Central Bank is not free nor sustainable over time. On the other hand, the dynamics of debt with more debt to pay is unlikely to be financially suitable to the interest rates that the Government agrees, in addition to easily fall off "Financial trap" hard to get out as witnessed by the past.

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In sum, even though expectations are favorable in the short term, local macroeconomic increased their vulnerability and dependence on the mood of the markets over the loss of a fiscal surplus that would ensure payment of the debt in full independence markets. To keep the pause in the outflow of capital will depend on whether the government manages to show ability to pay debt beyond 2010.