Markets calm down and country risk relaxes

Ecuadornews:

Does a light appear at the end of the tunnel? In recent days, the situation of the so-called emerging countries, such as Argentina and Turkey, seems to improve and this effect is also felt in Ecuador.

In recent months, the currency crises in Argentina and Turkey, which have devalued their currencies, have disrupted international markets and increased the refusal to lend money to those countries and other similar economies considered vulnerable because of their resemblance or closeness, such as the Ecuadorian, for example.

In general terms, the international economic situation complicates access to cheap credit to the Ecuadorian Government, which in recent years has been a key source to cover the fiscal deficit, that is, the gap that is generated due to the fact that revenues do not reach cover all expenses.

According to the specialized press, one of the reasons for the recovery of emerging economies during the past week is a possible new agreement for more financing between Argentina and the International Monetary Fund (IMF). The rumor that it will be ready next week stopped the devaluation of the peso.

It is expected that these days the new agreement would be announced that would include additional financing to the 50,000 million dollars that the multilateral approved in past months.

In the case of Ecuador, the country risk stood at 632 points last Friday, the lowest figure in almost two months.

In past weeks, the country risk of Ecuador was over 700 points and forced the Government to get money through operations with high guarantees. To borrow 500 million dollars from Goldman Sachs, he had to deliver bonds for 1,201 million dollars. It also got close to 600 million in multilateral organizations to execute some projects, such as the Quito Metro.

It is estimated that another 1,000 million more will come from bond issues and a potential credit from China.

Another factor that makes us think that better days are coming for emerging economies, is the recent purchase of Argentine and Turkish debt by Goldman Sachs.

Last week, the agency specializing in economics and finance Bloomberg revealed that the US financial giant acquired debt from those countries and said that “the worst is over”.

Bloomberg also collects statements from economists from another financial giant: JP Morgan. Analysts say the time has come to reduce the holding of US bonds and inject money into emerging markets. (I)

Source: https://www.expreso.ec/economia/mercados-economia-indicadores-bonos-estadisticas-ecuador-CK2387895