Gabriel Martino: “Argentina is out of the world, investors do not even want to see it”
According to the former president of HSBC, the country has had a serious political problem for decades and the lack of institutionalization means that the problems cannot be solved; His vision for debt, an agreement with the International Monetary Fund, and government spending
He is a Public Accountant from the Catholic University of Argentina (UCA) and holds an MBA from IDEA; After making a career at HSBC, in early 2012 he held the position of Chairman of the Bank in Argentina, a position he held until 2019; In 2020, he created an investment fund called BFL Invest, with which he founded the Clave Virtual Wallet.
Gabriel Martino has had a nearly 23-year career at HSBC Bank; He started working at the money table and became the CEO in Argentina. Two years ago he founded the virtual wallet Clave, which he now heads.
– Is the debt of our country stable in pesos?
– I think we should think before that, whether we want to be a normal country one day. When caring for specific issues such as debt in pesos, against the background of this abnormality, anything can happen. If I get it back to normal, I will tell you I have a solution. When we look only at the indices, Argentina has neither a debt sustainability problem, nor a dollar problem, nor an import problem. We Argentines have to think if we want a normal country.
-lost?
– We lack institutionalism. Argentina has had a serious political problem for 70 or 80 years. Until we agree on seven or eight key issues and until there is a shift and these goals are achieved, Argentina will not come out and we will continue to be abnormal. Latin America is moving slightly to the left, with Chile, Peru and now Colombia, but the countries have such an institutional framework that it is very difficult to change course. Gustavo Petro [flamante presidente electo de Colombia] Starting with 10 MPs, will not be able to make many changes. The same thing is happening in Peru and Chile. We are five steps behind in Argentina, we have to take the path to normalcy, with basic agreements, we need a logical shift. Christina [Kirchner] He said in his speech this week that inflation is a debt problem and compared it to the G20 countries where Argentina is among the countries with fiscal deficits. The problem is that they do not lend to us and others lend to us. The good thing about credit is that it gives you the leverage to do things, but Argentina no longer has access to credit. So why keep talking about a fiscal deficit if it’s impossible to finance it with debt? Either it decreases, or it has to be issued, whatever you like about inflation. The story goes so deep into Argentina, the illogical thing about abnormality, that we discuss whether emissions cause inflation in a country like Argentina, where expectations are very negative.
– Government launches swap to refinance 595,000 million debt in pesos. If the Ministry of Economy has not achieved the upgrade, is there an alternative to its financing by the Central Bank?
-When the government wins and they take power in 2019, the logic in any country where the same thing happened to Argentina is that you must first have a plan and then arrange with the fund, which is the lender of the last resort. So, in turn, this facilitates settlement with bondholders and everything becomes more sustainable. Argentina did everything backwards: it did not make a plan and had a bad deal with the bonds. The bottom line is that the country’s risk is 2200 points and the bonds cost $ 25, the yield is cheaper than the Ukrainian bonds. So, this week’s tender is a raffle, anything can happen because if the money is not collected, more will be paid, paid by giving and this will lead to higher inflation. We need to get back to normal. It’s very simple, there are not many returns.
– Do meetings with the minister help the bankers?
– I want to say: Argentines on something. Enough meetings, explaining unexplained things. Whoever manages must make a plan, explain and then implement it. What good is a web site if it simply “blends in” with everything else out there?
– The Minister says that the plan is a program with the IMF.
– This is not a plan, because in the first quarter, when we had to see the goals of compliance, it was not fulfilled. The Minister does not explain either; Nor does this government explain. If we take the series of consolidated expenditures of provinces, municipalities and national governments, from 1963 to 2004 expenditure was about 20% of GDP. There are years when costs were lower and others when there were more, for example, in the second government of Carlos Menem when he wanted to re-enter. [elección]. Since 2005, costs have risen to 42 product points, which is something that is not reasonable. And there was no investment in infrastructure, no competitiveness to make investments and that would create employment in the long run. I still do not know what it was spent on. We spend twenty points on the product and on top of the whole pension I do not know what we are spending on extra costs. So I do not know what the fate of short-term debt. By plan it is sustainable; Without a plan, anything can happen.
– How do you see the economic situation in the conditions of weak government, which has 17 months left?
– I see bad. On the one hand, when you do 15 activities in Argentina, most of them make money, although they are in Kalam, they worked moderately well until the first quarter of this year. From now on everything should start, but there are no expectations. In other words, something illogical is happening, it is that the world wants energy and food and we have a lot, but we have a lack of dollars where they belong. Argentina’s economy is bad, there are no expectations, there are no short-term investments, there are seven or eight sectors that are winners other than food and energy, which may be more winners like mining and tourism, but they are thinking of something else.
– Is it distrust or lack of institutions? Because the government of Mauricio Macri failed to address this.
– In my opinion, this is a political problem and this measurement is made on the day when someone wins the election and has a 70% agreement and that there is already a turn in this agreement, which does not mean that the same people. Match. It is good that at some point the opposition will win, but this should be a rational opposition and not one that goes from right to left, despite the fact that, unfortunately, Argentina has crushed completely wrong populism in the last 20 years. Until we have a political agreement, there will be no investment or there will be an investment like we have now, in the short term. If we remove the circus from Argentina, someone will invest, no doubt. The world wants energy and food. Argentina has Vaca Muerta, which is the second largest gas reserves and fourth largest oil reserves. Chile exports $ 50,000 million in mining; Argentina, only $ 2.5 billion when it has the second or third largest reserves of lithium in the world. During the post-pandemic, people want green, wildlife, nature and the open air, all that Argentina has to offer in terms of tourism. I can also name agribusiness, agrofood, the pharmaceutical industry and services exports, where there are operations for $ 6 billion, but there could be much more. Among the most important places in the world for the export of services is Poland, located in Central Europe; The bank in which I worked [HSBC] There were a significant number of people there, a country that is next to Ukraine and Russia at the center of the problem. Shouldn’t we think about having a plan in Argentina to be in a place in Latin America where there are no racial and political problems and no war is seen in the coming years? Because there is no institutionalism, we think of something else.
– When did we lose this institutionality? Why were Peru, Chile or Colombia rebuilt or strengthened and not us?
– Argentina had several opportunities. It has been in continuous and absolute decline since the middle of the last century. For a year and a half I studied in depth the economic history of Argentina with Gerardo della Paolera and, without arguing, we can analyze the New Democracy. For me, Carlos Menem ’s first presidency should have been the best in history and not the second, as he later wanted to re-enter and once again increase costs and start having problems. Argentina had two historic opportunities, with Menem and Nestor Kirchner, who had a great opportunity to make a big difference in Argentina and to be not only a statesman but also a hero for the next 50 years of textbooks, but also what happened. ? Argentina has the most important trade conditions in history and is growing, Christina spends 20 points and not to create competitiveness in investment in infrastructure, attract investment and create sustainable employment. The history books undoubtedly speak to your responsibility in this regard.
-That is, the terms of trade have changed and we do not have how to finance …
-Exactly. And that, too, does not change in four years. Of course, Macri made mistakes that were implementation problems, failures in understanding what the problems were. But in four years the course has not changed. When he left, in 2019, Macri left the deficit close to zero, the central bank was in trouble, it was a great help to start Alberto Fernandez’s management. The problem is that we do not know how to use it. And yet, this is not politics, this is reality.
– How do you see the international financial markets? What is the impact of rising US rates on Argentina?
-Unfortunately, Argentina is beyond the world, they do not even want to see it. We continue to break negative records. The debt is $ 25 and the country’s risk will double after the restructuring, I think there is no such case in history. On the one hand, because Argentina owes, monthly flows will not help at some point, but because the world is looking for certain things like energy and food that are left to Argentina, today the world really is an opportunity, no. problem. Now there is talk of a recession in the United States that it will slow growth slightly and may affect commodity prices, but that is not what I see in the short term.
– How do you see the cryptocurrency market?
– Cryptocurrency is a new class of assets that the more traditional market has not yet received so much and is therefore not regulated. The positive is that Bitcoin has fallen from $ 60,000 to $ 20,000 without infecting another market. How much silver is lost throughout the crypto is a pretty big part of the crypto ecosystem. In my opinion, there is no contagion in another market yet, there are no people who borrowed money with a stock guarantee to buy more crypto, which happened in other crises, for example, in 2008.
Source: La Nacion
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