In a radio interview, Argentina’s Economy Minister Luis Caputo addresses a report claiming Argentina’s Treasury made a new loan to the country, discusses how IMF interest payments are executed using SDRs, defends exchange-rate policy and recent export performance, explains why interest rates remain elevated, outlines why the government does not plan to issue new international bonds, and argues that structural reforms—especially tax reductions and a “fiscal innocence” law—are central to accelerating growth and investment. He also comments on inflation, subsidies, road concessions, labor modernization, and sectoral adjustment pressures (including business closures and the textile industry).
1) IMF payments and the “Treasury loan” report
Caputo rejects the claim that Argentina’s Treasury is receiving a new loan of roughly US$800+ million. He says it is not a loan and does not create new debt. He explains that IMF interest payments are made in the IMF’s unit (SDRs; in Spanish he refers to them as “DEGs”), not directly in U.S. dollars. Because SDRs must be obtained, Argentina buys SDRs from the U.S. Treasury (which he describes as a seller with SDR availability) and then uses those SDRs to pay the IMF. In his account, the transaction is a routine technical mechanism for IMF payments rather than financial assistance.
2) Living standards and public sentiment
Asked whether people are worse off than six months earlier, Caputo says no. He argues that expectations are better and that there is greater hope and calm, pointing to electoral support and claiming that a major destabilization attempt the previous year created fear and economic effects.
3) Exchange rate: “not an issue”
Caputo says the exchange rate is no longer a central problem. He cites record exports—especially in agribusiness—and strong volumes (he mentions 115 million tons and a large increase versus 2023). He says agribusiness represents a majority of exports and adds that energy exports are rising and Argentina is on track to become an “energy power.” He claims the Central Bank bought close to US$10 billion in January and suggests that without the Central Bank’s purchases, the exchange rate would be lower. He also references comparisons to a historical real exchange-rate baseline, arguing current conditions are competitive and compatible with export records and reserve accumulation.
4) Interest rates and country risk: why rates remain high
Caputo acknowledges rates are high and attributes this to the aftereffects of last year’s shock. He says the destabilization attempt produced:
- a growth cost (he claims growth could have been higher),
- an inflation cost (he says inflation had been lower until a shock),
- and a country-risk cost.
He describes a “collapse in money demand” during the episode, saying this pushed up inflation and increased uncertainty. He uses country risk as an example: despite multiple positive milestones over the past year (including IMF-related progress, Central Bank recapitalization, partial CEPO easing for individuals, electoral wins, and other measures), he says the country-risk level did not fall as much as expected because fear remained elevated. He argues normalization is not immediate after such a shock.
5) Why Argentina does not plan to return to international bond markets
Caputo says the government does not intend to issue new international debt merely to “prove” market access. He argues the market already signals access and that issuing bonds is not necessary. He frames the rationale in terms of avoiding “crowding out” private credit. Historically, he says, persistent fiscal deficits led the state to absorb available credit; now, with debt reduction and fewer new sovereign issues, investors recycle funds into Argentine corporate and provincial bonds (“crowding in”). He cites a recent sovereign payment (US$4.2 billion) followed by a wave of private and provincial issuance as evidence of that dynamic. He says the government prefers to keep this pattern, especially while it can refinance or meet obligations through lower-cost alternatives.
6) CEPO exit for companies (capital controls)
Asked when companies will see broader CEPO relief, Caputo gives a cautious answer: it will happen when the government deems the timing appropriate. He argues caution avoids generating new risks for the public and credits prior defensive measures—such as raising rates during the shock—for preserving stability. He says inflation should converge toward international levels and that lower rates and higher investment will follow.
7) “Real life” vs indicators: sectors adjusting, gas pipeline example, and competitiveness
The interviewers press on the “square meter” reality—how soon everyday life improves, noting many sectors remain weak. Caputo says sector performance is uneven during a model shift: some recover faster than others; firms within the same sector respond differently. He offers an example linked to pipeline procurement to illustrate incentives and cost differences. He argues the previous model mispriced energy (implying hidden subsidies and distorted investment), forcing expensive imports and state-funded infrastructure. He says a recent procurement saw dramatically lower costs than earlier state-led procurement and frames this as a result of better incentives and competition—while acknowledging that not all winners are domestic firms. He denies the government is “anti-industry” or “anti-business,” saying it is “anti–old model” and focused on better products at better prices for the public.
8) Business closures and labor reallocation
Asked about claims that 20–30 businesses close per day, Caputo responds that businesses also open, and that a reallocation is normal in a competitive transition. He argues that as inefficiencies can no longer be passed to consumers through pricing power, weaker firms may exit while competitive ones grow. He says the policy goal is job creation and tax reduction so layoffs are less disruptive because workers can move to other employment.
9) Roads and infrastructure concessions
On the poor condition of highways and road safety, Caputo says the government inherited routes in very bad shape and is already tendering major corridors. He says the main network (about 9,000 km of key corridors) should be tendered within a few months, focusing on routes carrying most freight activity.
10) Inflation outlook and household pressure
Asked about inflation (recent readings around 2.5% and expectations near 2.8%), Caputo says he expects a number around that range and reiterates the goal of convergence toward international inflation. Interviewers note people don’t “feel” the improvement due to rising expenses and services, and that many struggle to make ends meet. Caputo says the government has always acknowledged the transition is difficult. He argues that targeted subsidies remain for lower-income categories while broad subsidies for high-income households were reduced. He claims this targeting helped avoid social unrest. He links the removal of distortions to investment—especially in energy—predicting large export gains in energy and mining over the coming years and describing this as a pathway to jobs and higher incomes.
11) Labor modernization and taxes: dispute with governors
Asked about labor modernization and a tax chapter, Caputo says passage is “stuck” mainly because governors resist reductions in income-tax-related revenue. He notes the timing of the proposed reduction would affect later fiscal years and argues that cutting taxes is necessary for competitiveness. He gives an example from vehicle exports (Ford Ranger) to illustrate how provincial and municipal taxes can dominate export tax burdens and reduce competitiveness. He says the government wants flexibility on timing to avoid running deficits.
12) Retirees and “patience”
Asked how much longer retirees should wait, Caputo says the government is working for retirees and the lowest-income groups but cannot perform miracles. He claims poverty has fallen sharply and says pensions improved in dollar terms, while emphasizing that restoring stability and rebuilding conditions takes time. He argues this administration is different because it has made a political decision to maintain macroeconomic order, and he expects growth to translate into broad improvement over time.
13) Payment stress and rejected checks
Asked about rising rejected checks and debt stress, Caputo attributes it to the earlier “war economy” period with high rates, especially on credit cards. He says banks are refinancing those debts into manageable installments and expects credit conditions to continue normalizing, including more dollar credit over time.
14) “Fiscal innocence” law and bringing cash into the financial system
Caputo calls the “fiscal innocence” law potentially transformative. He argues Argentina will grow regardless, but the law can accelerate growth by encouraging people to move informal cash holdings into the formal financial system. He cites an estimate of very large dollar holdings “under mattresses” and says even a partial inflow could solve many problems by expanding deposits and enabling cheaper credit, including mortgages and real-estate development.
He addresses concerns that banks may refuse deposits due to compliance and future political retaliation. He says the fear is unfounded because the law provides legal protection for purely tax-related noncompliance (while excluding proceeds from serious crimes). He encourages people to use Banco Nación if private banks hesitate, saying its leadership will comply with the law and only require enrollment in a simplified tax regime. He argues holding cash at home has security risk and zero return, while banking it could earn interest and help expand credit availability.
15) Textile sector: ending long protection, focusing on consumers
On textiles and job impacts, Caputo describes the sector as long-protected at the expense of consumers paying far above world prices. He argues this burden falls hardest on low-income households and that competition should lower prices and redirect spending into other sectors. He says parts of the textile chain (like yarn) could be competitive due to domestic inputs, while apparel assembly faces global wage competition. He argues the policy priority is jobs and mobility—workers should be able to find other employment if firms cannot compete—rather than maintaining protection that raises prices for everyone.
Closing
The interview ends with thanks to the minister for his time and restates the central themes of his argument: avoid new sovereign borrowing, reduce taxes to raise competitiveness, expand formal investment by increasing trust and legal clarity, keep fiscal balance, and maintain a gradual, cautious approach to liberalization while targeting assistance to those most in need.
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