The verdict for the first time in the North American justice system, which forced the State of Argentina to pay USD 16,000 million for the expropriation of YPF, fell like a real bomb at the end of the week. This means another big backpack for the Government that sits on December 10, but it also consolidates an idea that is already deeply rooted in the world of investments: in Argentina contracts are not respected.
It is highly likely that history will repeat itself in relation to the holdouts, that is, the vulture funds that did not accept the debt swaps created by Kirchnerism. After several appeals, the final verdict finally came and in the middle of a series of precautionary measures to seize Argentine assets around the world, including the Libertad frigate.
In the end, the government of Mauricio Macri ended up paying the money to the funds suing Argentina, but put the debt over USD 15,000 million. History is about to repeat itself and for the same amount, this time in favor of the Burford fund, which bought the right to sue for expropriation of the company.
Before the decision, financiers DarÃo Epstein and Juan Nápoli also met in New York with about 40 bankers, most of them Argentineans who have worked in Manhattan for decades. The message from Wall Street executives left no room for doubt: “For Argentina there is not a single dollar.”
No possibility
The message goes beyond the dollarization proposal advocated by Javier Milei. The financial world is clear that today there is no possibility to negotiate a million dollar loan to make such a bet. Argentina has been left without external credit for several years now, it also has no room to increase internal debt and some time ago the last remaining option to plug the financial holes was exhausted : the issuing of money.
Under these conditions, the dollarization option expressed by Milei will not survive and will definitely remain as a campaign slogan. This is not something surprising in Argentine politics: Alberto Fernández promised in the run-up to the election that he would pay the retirees who had an interest in Leliq. And four years ago Macri assured that the easiest thing for his government is to lower inflation.
Milei’s emissaries clarified to their interlocutors in New York that a possible economic plan is still being discussed and that there is no confirmed team. Logically, because the great victory achieved by PASO surprised the entire political world, including the libertarians themselves, who did not expect such an advantage.
The “red circle” already believes that Milei will reach the runoff and made calculations to understand if she is about to win the first round. To do this, they must get at least ten points more than PASO (more than 40% of the votes) and also get at least ten points more than whoever is second. Neither of the two conditions is guaranteed, far from it.
