Argentina will force its state-run institutions to sell debt denominated in dollars to the private sector, a complex measure aimed at easing pressure on the official exchange rate and preserving the central bank’s cash reserves, according to Economy Ministry officials.
(Bloomberg) — Argentina will force its state-run institutions to sell debt denominated in dollars to the private sector, a complex measure aimed at easing pressure on the official exchange rate and preserving the central bank’s cash reserves, according to Economy Ministry officials.
The government will issue two decrees to execute the change. The first will force public sector institutions to sell dollar debt to the market under local Argentine law through a schedule that policy makers will establish. The second will mandate the same institutions swap their global bonds controlled under New York law for bonds in pesos.
Economy Minister Sergio Massa will also meet with financial sector executives Wednesday morning to offer the local-law, dollar bonds that will mature after 2029.
By removing the public sector’s dollar debt burden and pushing out maturities for private investors, the aim of the measure is to ease near-term pressure on the official exchange rate and preserve the central bank’s dwindling cash reserves.
By eliminating the public sector’s dollar debt burden and offering dollar instruments to private investors, the move is aimed at relieving short-term pressure on the official exchange rate and preserving the central bank’s dwindling cash reserves. Those reserves are a key ingredient to preventing a sharp one-time currency devaluation.
An Economy Ministry spokesman declined to comment.
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