Argentina

Stage II: Establishing an Orthodox

Monetary Framework
New York, July 2024

Vladimir Werning, Deputy Governor BCRA

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Argentina Stage II: Establishing an Orthodox Monetary Framework

OVERVIEW

MACROECONOMIC STABILIZATION AGENDA

1 | Stage I: Delivering an Orthodox Fiscal "Exit Strategy"
2 | Stage II: Establishing an Orthodox Monetary Framework (Overview and the Nuts & Bolts)
3 | Stage III: Transiting to a Currency Competition & Prudent Lifting FX Controls

MICROECONOMIC GROWTH AGENDA

4 | Stage I, II, & III: Promoting Private-Sector Led Growth: Market-Driven Incentives
5 | Stage I, II & III: Tapping into Private-Sector Potential and Political/Popular Support

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Argentina’s Stabilization Program Overview: Simultaneous Macro, Micro and Poli7cal Reform

Macro Rebalancing STAGE 1 Eliminate Flow & Manage Stock Imbalances (Domestic and External)
(Realigning and
Stabilizing Prices) STAGE 2 Regain Policy Tools and Lay Foundations for Currency Competition

Micro Reform STAGE 1 Foundational Law (Law 27,742) / Presidential Emergency Decree 70/2023
(Recovering Growth
& Competitiveness) STAGE 2 Ongoing Reform / Creation of Ministry of Deregulation & Transformation

STAGE 1 Foundational Law (Law 27,742) / Fiscal Package (Law 27,743)

Political
(Sustainability)
STAGE 2 “Pacto de Mayo” (10 Commitments Signed by 18 Governors)

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I

Stage I: Delivering an Orthodox Fiscal "Exit Strategy"

1 | A Strategy to Eliminate Sources of Excess Monetization

2 | Fiscal Adjustment Shuts Off "Faucet #1" of Excess Money Supply
3 | Policy Rate Cuts Tighten "Faucet #2" of Excess Money Supply
4 | FX Swaps Absorb Importer Claims on Reserves
5 | Narrowly Avoiding a Crisis: Less Pesos Relative to BCRA Reserves
6 | Fiscal Anchor + FX & Tariff Adjustment = Upfront Relative Price Correction
7 | Fiscal & FX Anchor + Policy Rate Cuts = Results in Rapid Disinflation
8 | Lower CPI + Income Hikes by Decree = Improving Social Programs & Pensions

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I 1. A Strategy to Eliminate Sources of Monetization

Drivers of Monetary Base

Average Monthly Change at Constant Prices of June 30, 2024
2023 (Through December 10th) 1 Semester 2024 (Since December 10th)
Trillion ARS Trillion ARS
Expansion Expansion
5 5
4,1
4 4

3 2,7
3 2,4
2,0
2 1,6 1,4
2
1,1
1 1

0 0
-0,8
-0,2
-1 FX Purchases -1
-0,8
-2 -2

-3 -3
Contraction BOPREAL FX Purchases Contraction

-4 -4
-4,0 -4,2
-5 -5
BCRA Monetary External Direct Fiscal BCRA Indirect Fiscal BCRA Monetary External Direct Fiscal BCRA Indirect Fiscal
Sterilization Base Sector* Interest (BID + PUT) Sterilization Base Sector* Interest (BID + PUT)
Faucet #1
*Excludes Foreign Exchange Purchases. *Excludes Foreign Exchange Purchases.
Source | BCRA. Source | BCRA.

Fiscal adjustment ini>ates process of ShuAng off the Faucets of Supply-Driven Monetary Base Growth 5

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage I 2. Fiscal Adjustment Shuts Off "Faucet #1” of Excess Money Supply

Primary Balance of the Non-Financial Public Sector Cumulative Net Financing

At Constant Prices of June 30, 2024
% of GDP Trillion ARS
Net Financing since December 11th, 2022
4 60
Net Financing since December 11th, 2023

2 50
2.6

0 40
-0.4
-2.3 -2.4 -2.7
-3.0 30
-2 -4.2 -3.8

-6.4
20
-4
-2.1 -0.08
10 Target over Target over
-6 Accomplishment Accomplishment

0
-8
2016 2017 2018 2019 2020 2021 2022 2023 Jan/
-10
May
Dec-11-22 Mar-11-23 Jun-09-23 Sep-07-23 Dec-06-23 Mar-05-24 Jun-03-24
2024
Note | Jan/May 2024: Seasonally Adjusted Annualized Primary Balance
Source | BCRA and Ministry of Economy. Source | BCRA.

The Zero Fiscal Deficit Implies No Net Treasury Debt Issuance and No Net Monetary Financing
6

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I 3. Policy Rate Cuts Tightened "Faucet #2” of Excess Money Supply

Interest Payments on BCRA´s Remunerated Liabilities and Policy Rate

El plan monetario
% of Monetary Base EAR; %
900 300

800
250
700 Interest Payments - Annual basis

600 Monetary Policy Interest Rate (right axis) 200

500
150
400

300 100

200
50
100

0 0
Jan-19 Dec-19 Nov-20 Oct-21 Sep-22 Aug-23 Jul-24

Note | Data as of July 10th, 2024.

Source | BCRA.
7

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I 4. FX Swaps Absorbed Importer Claims on Reserves

Decline in BCRA Reserves + Increase in Unsatisfied Claims FX Swap (BOPREAL)

on BCRA Reserves*
Billion USD Million USD
Series 1 Series 2 Series 3 Cumulative (right axis)
43.0 3,000 10,000

5 9,000
2,500 2,436
8,000
7,000
Reserves Sold 2,000
1,709 6,000
18.4
1,500 5,000
1,179 1,170
4,000
1,000 903
3,000
560
490 2,000
500 301
271
Committed 1,000
19.6 67 57 100 89 103 113 34 60
Reserves 338
0 0

Jan-04-2024
Jan-11-2024
Jan-18-2024
Jan-25-2024
Jan-31-2024
Feb-08-2024
Feb-15-2024
Feb-22-2024
Feb-29-2024
Mar-07-2024
Mar-14-2024
Mar-21-2024
Apr-11-2024
Apr-25-2024
May-09-2024
May-16-2024
May-23-2024
Dec-28-2023
2023 (Up to 12/10/23)
*Importers Overindebtedness is the Difference in Debt Relative to Historical Average Debt Stock
Source | BCRA. Source | BCRA.

BCRA Needed to Address Importers (Forced) Increase FX Swap (BOPREAL) Transformed USD Demand Stock into
in Debt and China Swap Roll-over (June) USD Demand Flow Over 3yr; Reactivating Supply Chains
8

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I 5. Narrowly Avoiding a Crisis: Less Pesos Rela7ve to BCRA Reserves

BCRA Reserves Stocks Ratio of BCRA Remunerated Liabilities to Net Reserves

Excluding Liabilities with Foreign Residents

Note | Data as of July 11th, 2024. Note | Data as of July 8th, 2024.
Source | BCRA. Source | BCRA.
9

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage I 6. Fiscal Anchor + FX & Tariff Adjustment = Upfront Relative Price Correction

Relative Prices
References

CPI Divisions

Group that Belongs to CPI Housing

Group that Belongs to CPI Food and Beverages

Group that Belongs to CPI Health

Group that Belongs to CPI Transportation

Other Significant Variables

*Data INDEC as of Apr-24 Linked between Apr-24 and Jun-24

with Own Estimations Based on Wage Agreements of the 25
Most Representative Labor Unions.
**Data as of Jun-24 in relation to Jun-19 compared to Data
as of Nov-23 in relation to Nov-18, to address seasonal
considerations.
***Considers the Official Exchange Rate Plus the PAIS Tax
Applicable for Imports.
****Data as of May-24.
Source | BCRA from INDEC, Ministry of Economy, Rava
bursátil and Labor Unions Data.
10

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage I 7. Fiscal & FX Anchor + Policy Rate Cuts = Results in Rapid Disinflation

Headline CPI: Consensus Forecasts (REM) vs. Actual Data BCRA Proxy Measure for Core CPI
%
Monthly % chg.
14
30 CPI
28.3
27.0 CPI Core 12
25.0
25 25.5 REM (Dec- 23)
10 Weekly Average*
20.6
20 8
20.2 18.2

15.0 6
15 13.2
13.4 12.0
12.8 11.0 4
12.3 10.0
10 8.8 8.3
9.4 2
0.3
4.2 4.6
5 6.3 3.7* 0

Jun-08-2024
Jun-18-2024
Jun-28-2024
Dec-01-2023
Nov-01-2023
Nov-11-2023
Nov-21-2023

Dec-11-2023
Dec-21-2023
Dec-31-2023
Jan-10-2024
Jan-20-2024
Jan-30-2024
Feb-09-2024
Feb-19-2024
Feb-29-2024
Mar-10-2024
Mar-20-2024
Mar-30-2024
Apr-09-2024
Apr-19-2024
Apr-29-2024
May-09-2024
May-19-2024
May-29-2024

Jul-08-2024
3.7 3.7
3.2*
0
Nov- 23

Feb- 24
Jan- 24

Mar- 24

Jun- 24
Dec- 23

Apr- 24

May- 24

Jul- 24
*Week 1 Runs from the 1st to the 7th day of Each Month; Week 2, from the 8th to the 15th of
*BCRA Projec^ons. Each Month; Week 3, from the 16th to the 23rd of Each Month; and the Fourth Week, from
Source | BCRA from REM-BCRA and INDEC Data.
the 24th until the End of the Month. When the Available Data Does Not Fill the Entire Week
(but at Least Covers Half of the Week), the Average Weekly Variation up to the Last Available
• CPI Undershot Consensus by nearly 50 pp. in 1H2024 Data Is Used.
• Estimate for July core CPI appears to be nearing 3%, Note | Preliminary Data May Undergo Corrections, Especially Those of the Current Month.
Source | BCRA from Online Supermarket and Butcher Shop Websites and Kairos data.
following a 3,7% reading in June 11

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage I 8. Lower CPI + Income Hikes by Decree = Improving Social Programs & Pensions

Universal Child Allowance Minimum Pension

at Constant Prices of June 2024 Index at Constant Prices
ARS jun-24
75.000 74.354

70.000 Jun-20
64.974 dic-21
65.000 dic-20
61.911 ene-24
61.193
61.603
60.000 dic-22
54.847
55.000

50.000

45.000

40.000 -42.8% +100.1%

35.000 dic-23
37.151
30.000

25.000
abr-20

abr-21

abr-22

abr-23

abr-24
ene-20

jul-20
oct-20
ene-21

jul-21
oct-21
ene-22

jul-22
oct-22
ene-23

jul-23
oct-23
ene-24

Source | BCRA, Ministry of Economy and INDEC. jul-24 Source | BCRA, Ministry of Economy and INDEC.

Executive Reverses More than 3 Years of Inflationary Executive Changes Pension Formula that Over the
Erosion of Social Safety Net Income in Only 3 Months. Last 2 Years Dictated an Erosion of Pension Income.
12

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization Agenda: Stage II

Stage II: Establishing an Orthodox Monetary Framework (Overview)

1 | Policy Rate Cuts Tightens "Faucet #2" of Excess Money Supply
2 | Transfering BCRA Sterilization Shuts Off "Faucet #2" of Excess Money Supply
3 | Transfering Sterilization to Treasury: LECAPS + LEFI Do Not Imply an Increase in Debt
4 | Transfering Sterilization: Warehousing Liquidity, Not Funding for Treasury
5 | Eliminating Puts/Bids & Sterilizing External Flows Shuts Off "Faucet #3 & #4" of Money Supply
6 | New Monetary Framework Allows BCRA to Better Manage Liquidity, Limit RER Strengthening
7 | BCRA Money Demand Models Anticipate Real MB Growth in 2H24
8 | Demand-Driven Economic Re-Monetization is a Welcomed Development

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage II 1. Policy Rate Cuts Tightened "Faucet #2” of Excess Money Supply

Drivers of Monetary Base

Average Monthly Change at Constant Prices of June 30, 2024
1 Semester 2024 (Since December 10th) July (up to 10th ) 2024
Trillion ARS Trillion ARS
Expansion Expansion
5 5

4 4

3 2,7
2,4 3
1,9 2,0
2 1,6 1,4 2 1,3

1 1
0,1 0,2
0 0
-0,8
-1 -1 FX Purchases

-2 -2
-2,8
-3 -3
BOPREAL FX Purchases Contraction
Contraction
-4 -4

-5 -4,2 -5
BCRA Monetary External Direct Fiscal BCRA Indirect Fiscal BCRA Monetary External Direct Fiscal BCRA Indirect Fiscal
Sterilization Base Sector* Interest (BID + PUT) Sterilization Base Sector* Interest (BID + PUT)

Faucet #4 Faucet #2 Faucet #3

*Excludes Foreign Exchange Purchases. *Excludes Foreign Exchange Purchases.
Source | BCRA. Source | BCRA.
14

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 2. Elimina7ng BCRA Steriliza7on Shuts Off "Faucet #2 " of Excess Money Supply

BCRA Interest Payments on Remunerated Liabilities BCRA´s Remunerated Liabilities in ARS

El plan monetario
At Constant Prices of July 8th Monthly Average, at Constant Prices of July 2024
FX Restrictions BCRA´s Remunerated Liabilities in ARS
Billion USD Trillion ARS
6 Market Driven
80 Correction
5.4 72.5

5 70 Policy Driven
Correction
4.2 60 58.3
Policy Rate
4 3.7 Cuts
Migration RL (BCRA) Market Driven
50 Correction
to Lecaps (Treasury)
2.9 41.0
3 40
2.4
2.3
Migration to Letra Fiscal 30
2 de Liquidez (LEFI)
1.3 20
1 12.9
0.6 10
0.2 0.0
0 0 0.0
nov-23 dec-23 jan-24 feb-24 mar-24 apr-24 may-24 jun-24 Early Late July Jan-03 Feb-06 Mar-09 Apr-12 May-15 Jun-18 Jul-21 Aug-24
July Projection
Source | BCRA. Source | BCRA.

By First Reducing the Quasi-fiscal Cost BCRA Rate Cuts facilitated the Transfer of Liabilities to the Treasury
15

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 3. Transfering Sterilization: LECAPS + LEFI Do Not Imply an Increase in Debt

50
Treasury and BCRA. Net Consolidated ARS Debt
44.1 43.2
% of GDP 45 42.7 42.3
41.2 40.8
50
39.3 BCRA Remunerated Liabilities in ARS (A)
44.1 40 37.9
45 42.7 42.3 43.2
41.2 40.8
40
35 39.3
37.9 Treasury Public Debt in ARS (Excluding
BCRA Securities Holdings) (B)
35 30
30.6 30.5 29.8 Consolidated ARS Debt (A+B)
34.3 30.2 30.3
30
25 27.9 27.5
30.6 30.5 25.9
29.8 30.2
25 27.9 27.5 B Net of National Treasury ARS Deposits
25.9 20
20
15
15

10 10
Note | ARS Deposits Considers Treasury Deposits in BNA (Including
Fixed-term Deposits) and in BCRA Accounts.
5 5 July | National Treasury Public Debt Includes ARS 15.9 bn. of Estimated
Future LEFI Holdings of Banks (in Exchange for Passive Repos from the
0 BCRA).
Dec-23 Jan-24 Feb-24 Mar-24 0
Apr-24 May-24 Jun-24 Jul-24 Source | BCRA, INDEC and Secretary of Finance.

16

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 4. Transfering Sterilization: Warehousing Liquidity, Not Funding for Treasury

Cumulative BCRA Financing of Treasury Treasury's Liquid Peso Deposits

and BCRA Remunerated Liabilities At Constant Prices of June 2024
At Constant Prices of July 8th, 2024
BIllion ARS
Trillion ARS Trillion ARS
21
15 50

Millones
LECAP LEFI
17.8
18
Local Currency (Incl. Fixed-term Deposits) 16.5
5 40
15 Foreign Currencies

12
-5 30 10.5

8.8
9 8.0
7.4 7.4
6.7 6.5
-15 20 5.8 5.9 5.8
6 5.3 5.1
4.6 4.3 4.3 4.3 4.5
Monetary Effect of Fiscal Policy 4.1 4.0 3.7 3.8 3.9
3.1
BCRA Remunerated Liabilities (Right Axis) 3 2.5
-25 10 2.0 2.0 1.7
1.2 1.1

Jan-22

Oct-22
Nov-22

Oct-23
Nov-23
Mar-22
Apr-22

Jun-22

Dec-22
Jan-23

Dec-23
Jan-24

Mar-24
Apr-24

Jun-24
Feb-22

May-22

Aug-22

Mar-23
Apr-23

Jun-23
Sep-22

Feb-23

May-23

Aug-23
Sep-23

Feb-24

May-24
Jul-22

Jul-23

Jul-24
-35 0
dic-07 ene-02 ene-28 feb-23 mar-20 abr-15 may-11 jun-06 jul-02

Note | Data as of July 10th.

Source | BCRA. Source | BCRA.
17

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 5. Eliminating Puts/Bids & Sterilizing External Flows Shuts Off "Faucet #3 & #4"

BCRA's Liabilities and Contingencies (BIDS+PUTS)

• Put opZons on Treasury bonds held by
El plan monetario at Constant Prices of July 10, 2024
banks ($17.7 Tn) consZtute an indirect
source of "Fiscal Dominance" morphed
into "Banking System Dominance"(BCRA’s
peso issuance is subject to banks
discreZonary exercise of puts).
• ConZngent monetary liabiliZes from puts
peaked at 4,2% of GDP and currently
represent 3% of GDP or 0.8x the
monetary base.
• RotaZon to issuance of European puts (20%
of total) miZgates, but does not eliminate,
the conZngency.
• EliminaZng puts will allow BCRA to reduce
uncertainty regarding the path of money
supply.
Note | BCRA´s Remunerated Liabilities in Foreign Currencies are Excluded. Data as of July 10th, 2024. Note | Through Communication 'A' 7546 Issued on July 12th, 2022, the
Source | BCRA. BCRA Enabled the Auctioning of Put Options on Sovereign Bonds.
Source | BCRA. 18

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 6. Monetary Framework Allows BCRA to Better Manage Liquidity, Limit RER

Interest Rates
Monthly Average • BCRA’s Models provide BCRA's Board with
monetary aggregate projections that are
consistent with preserving domestic price
stability.
• BCRA’s policy rate reached a floor of 3.3%
(monthly effective rate) in May and has
remained stable since.
• The elimination of remunerated liabilities
allows BCRA to:
o Eliminate a tax wedge affecting the
effective policy rate.
o Assess adjustments to this rate in
response to liquidity conditions
reflecting economic fundamentals.

Source | BCRA.
19

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 7. BCRA Money Demand Models An7cipate Real MB Growth in 2H24

Monetary Liabilities in ARS Cash Held by Public

At Constant Prices of June, 2024 In terms of GDP
El plan monetario
% of GDP
3.5

3.3 2° deviation
1° deviation
3.1
Observed
2.9 Base

2.7

2.5

2.3

2.1

1.9

1.7

1.5
Dec-22 Jun-23 Dec-23 Jun-24 Dec-24

Note | Sep-24 and Dec-24 Forecasted. Note | Projected Trajectory of Currency Demand and Confidence Bands for 2nd Half 2024
Source | BCRA. Derived from Model Output of BCRA Monetary Programming
Source | BCRA. 20

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 8. Demand-Driven Re-Monetization is a Welcomed Development

Monetary Aggregates
El plan monetario
Seasonally Adjusted at Constant Prices of June, 2024 • The projected trajectory of monetary
aggregates (and confidence
bands) for 2nd half 2024 are derived
from model output of BCRA
monetary programing framework

• The path of money growth is

consistent with price stability

• BCRA's policy tools provide

authorities with the flexibility to
respond, when necessary, to
perceived deviations of liquidity
from equilibrium

Note | Sep-24 and Dec-24 Forecasted.

Source | BCRA.
21

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II

Stage II: Establishing an Orthodox Monetary Framework (Nuts & Bolts)

1 | The Monetary Strategy in Images: Fixing M = Broad Monetary Base
2 | The Monetary Strategy in Words: Fixing M = Broad Monetary Base
3 | Strengthening BCRA's Balance Sheet to Reclaim Policy Tools
3 | Strengthening BCRA's Balance Sheet to Avoid Debt Sterilizagon
4 | An Orthodox Monetary Framework: New Plumbing
5 | Puhng the Gears of the New Monetary Framework in Mogon

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 1. The Monetary Strategy in Images: Fixing M = Broad Monetary Base

Monetary Base and Broad Monetary Base (Incl. BCRA Remunerated LiabiliZes)
El plan monetario At constant Prices of June 2024 NEW MONEY FLOWS:
Trillion ARS
Sources of Undesired Monetary Supply
120
Sterilization of STAGE 2
Monetized
STAGE 1
• Faucet #1: Fiscal Deficit
100 Fiscal Deficits Zero Deficit Deficit
Sources of
• Faucet #2: BCRA Interest Payments
Interest on Rem Liab.
ZERO NEW MB
80 Normal
Broad Monetary Base
Contingencies (Puts)
SUPPLY Transfer of Sterilization to Treasury
MB BCRA Balance of Payments
(BMB)
Demand
60 Remun.
9.1% of GDP M FIXING = BMB
• Faucet #3: Put Options
Liabilities
• Faucet #4: External Surplus (in a
Treasury Warehousing
40
6.5% of GDP
of Domestic BMB Context of FX Controls)
Monetary Base (MB) Liquidity
20 EXISTING MONEY STOCK:
Demonitization of Remonitization of the Economy
the Economy 2.6% of GDP based on MB Demand Fixing M = Broad Monetary Base
0

Nov
May
D-16
D-17
D-18
D-19
D-20
D-21
D-22
N-23
D-23
Jan-24

D-24
D-25
D-26
Mar

Jul
Jun
Feb

Aug
Sep
Abr

Oct
Monetary Base (MB)
Broad Monetary Base (BMB)
INSTABILITY EXIT STRATEGY STABILITY & GROWTH
- Macro policy inconsistency - Macro Rebalancing - Micro Reform
- "Crowding Out" of Private Sector - Normalizing Liquidity - "Crowding In" of Private Sector Source | BCRA.
- Spiraling Inflation - Declining Inflation - Rising Economic Activity
23

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage II 2. The Monetary Strategy in Words: Fixing M = Broad Monetary Base

1. Prior to Exchange Controls and Fiscal Monetization: Monetary Equilibrium

Monetary equilibrium was associated with demand for Base Money (MB) between 8-9% of GDP
2. On the Brink of Hyperinflation: Monetary Imbalances Rise Throughout 2022-23
In November 2023 Base Money fell to only 3,2% of GDP and Broad Money Base (BMB) rose to 12,7% of GDP, as BCRA policy rate
hikes inflated remunerated liabilities (RL) to 9,5% of GDP
3. Stage I of the Stabilization Program: Zero Fiscal Deficit + Reduction of Excess Remunerated Liabilities
BCRA policy rate cuts diluted RLs thereby reducing the BMB which, by April 2024, converged to the historic equilibrium of the MB
4. Stage II of the Stabilization Program: Zero Sources of New Monetary Base Growth + Preservation of Domestic Liquidity Stock
Negative real rates cease to constitute a policy goal. In "fixing M = BMB", banks' idle stock of domestic liquidity will be preserved.
5. Stage III of the Stabilization Program: Currency Competition Regime and "Crowding In" of the Private Sector
Following the elimination of BCRA's RLs, equivalent to 6,5% of GDP (end April), idle liquidity will be "warehoused" in the form of bank
holdings of Lecaps & LEFI, providing future fuel for the expansion of bank credit to the private sector. As money demand lifts the MB and
credit growth absorbs bank liquidity, banks' LECAP and LEFI positions will be naturally unwound, reducing Treasury debt.
6. Convergence to the Steady State: A More Rapid Real GDP Recovery with Less Real Exchange Rate Appreciation
The unwinding of "warehoused" domestic liquidity diminishes the economy's reliance on external sources of liquidity to feed the re-
monetization process. The benefits for the economy are two-fold for the domestic and external balance:
1. Domestic Equilibrium: Commitment to fiscal balance sets initial conditions (low real interest rates) for "crowding in" private sector
2. External Equilibrium: Exchange rate appreciation pressure associated with re-monetization processes will be minimized
24

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage II 3. Strengthening BCRA's Balance Sheet to Reclaim Policy Tools

Liquidity Administration
El plan Monthly Average at Constant Prices of June 2024
monetario
Trillion ARS
1. Zero Fiscal Deficit 2. Zero Issuance 3. Zero Contingency
100 (Monetary Policy Rate Cuts)

May 17th
New Liquidity
Framework Puts
80 LECAP DNU LEFI Repurchases LEFI
Treasury
LECAP
60

Puts
40 BMB +
Remun. Liabilities Broad
M Contingent
Monetary
Base
20 Puts = 0 Monetary Base (BMB)

0
Dec 22 Dec 23 Apr 24 May 24 Jun 24 Jul 24 End Jul 24 Source | BCRA.
25

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage II 4. Strengthening BCRA's Balance Sheet: Lessons Learned - Debt Sterilization

BCRA´s Remunerated Liabilities in ARS

Monthly Average, at Constant Prices of July 2024
FX Restrictions BCRA´s Remunerated Liabilities in ARS
Trillion ARS
Market Driven
80 Correction
72.5
70 Policy Driven
Correction
60 58.3

Market Driven
50 Correction
41.0
40

30

20

12.9
10

0 0.0
Jan-03 Feb-06 Mar-09 Apr-12 May-15 Jun-18 Jul-21 Aug-24

Source | BCRA.

26

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 5. Orthodox Monetary Framework: New Plumbing

High Inflation Regime Zero Orthodox Monetary Framework

El plan monetario Deficit

BCRA Asset Mgrs

Banks &
Treasury Asset Mgrs Balance Treasury BONDS
Sheet

Credit
LECAP Secondary

Risk
Bonds Market
Fiscal
Fiscal Excess Remun. BCRA
(Policy Rate) LECAP BONDS
Deficit Liquidity
Deficit Liabilties
LEFI
LECAP BCRA

Liquidity
1.5x Policy Rate
Banks

Risk
Bids/Puts
Treasury
Treasury LEFI LEFI BCRA
Banks (Policy Rate)
Bonds Bonds Cash BCRA
Reserves

Credit
BANK Money

Risk
CREDIT Demand
27

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage II 6. Putting the Gears of the New Monetary Framework in Motion

• Interest Cost Transfer → From BCRA to Treasury

• Reinforces Policy Orthodoxy → Reduces Money Supply Growth
Fundamental Policy Progress
• Alignment of Incen>ves → BCRA Policy Rate / Liquidity Management
• Necessary Groundwork → FX Regime / Currency Compebbon

• Tax Wedge Elimina>on → More Efficient Policy Rate Transmission

Key Financial Implications • No Treasury Roll Over Risk → Cash Deposit
• Compliance with IMF Program → June Structural Benchmark

Transparent Accounting Standards • Treasury Debt Stock → No Change / Declines Over Time
• Treasury Interest Payment → Capitalized / Paid

Relevant Regulatory Constraints • Banks' Exposure to Treasury → Regulatory Limits & Transition Period

• BCRA & Treasury → New Instrument (LEFI) & Swap (CER Bonds)
Smooth Operational Transition • BCRA & Treasury → Treasury Account for Interest Payments
• BCRA & Banks → Replacement of Repo Window with a Trading Facility
28

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on Agenda: Stage III

Stage III: Transiting to Currency Competition & Prudent Lifting FX Controls

1 | Lifting Exchange Controls Requires Prudential Reserve Management

2 | BCRA Reserve Dynamics: Driven by Seasonality, not 80/20 Policy
- Lower Formal Market USD Supply: Normal Agro Exports but Lower Prices & Paying off Debt
- Higher Formal Market USD Demand: Higher Debt and Winter Energy Payments
3 | FX Gap Dynamics: Bond Spreads, Importer Debt Repayments
- Higher Informal Market USD Demand: External Risk, Migration of Import Payment
4 | Real Exchange Rate Dynamics: 2% FX Crawl
• Low Wages in USD Terms, High Margins
• Lessons Learned: Fiscal Anchor Makes a Difference

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage III 1. Lifting Exchange Controls Requires Prudential Reserve Management

Complexity of FX Regulations Ratio of BCRA Remunerated Liabilities to Net Reserves

Excluding Liabilities with Foreign Residents

Words Counted
80,000

Argentina Bolivia Brazil Chile

Colombia Ecuador Mexico Paraguay

60,000 Peru Uruguay USA

40,000

20,000

0
1999 2001 2003 2005 2007 2009 2012 2014 2016 2018 2020 2022

Note | Data as of July 8th , 2024.

Source | BCRA From Federico Forte’s Data (IMF-AREAER). Source | BCRA.
30

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 2. BCRA Reserves Dynamics: Driven by Seasonality, Not 80/20 FX Policy

BCRA USD Purchases and Net International Reserves Actual Exports and Imports of Goods vs Export Proceeds
and Import Payments in Official + Parallel FX Markets
Billion USD Billion USD Billion USD
1st semester 2024
Exchange Market
5 20 45
Alternative FX Market
BCRA Net Purchases (20 Days Moving Sum) 39.6
4 16 40 BOPREAL
NIR at Current Prices (right axis)
35 7.6
3 12
30 27.7
2 8
2.0
25
1 4
9.3
20 38.5
0 0 32.0
15
26.1
-1 -4
10
16.4
-2 -8 5

-3 -12 0
Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Exports Imports Exports Proceeds Imports Payment
Note | Data as of July 11 , 2024.
th
Source | CNV, SEPAIMPO, RIOC and INDEC.
Source | BCRA.

Reserve Accumulation in formal FX market: Import Payments Through CCL (9.3 bn) Exceed Loss of Exporter
Proceeds (7.6 bn for Goods, or 8.2 bn for G&S) Attributed to Maintaining the 80/20 Benefit 31

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 2. BCRA Reserves Dynamics: Normal Agro Shipments But Lower Prices

Trucks with Crops Entering Argentine Ports Commodities Prices (IPMP BCRA)
El plan monetario Deflated by US CPI

Note | Includes: Wheat, Corn, Sorghum, Barley, Soybeans and Sunseeds. Jul-24: Estimated
with Eleven Days Data.
Source | BCRA from Secretariat of Agriculture, Livestock, and Fisheries Data Source | BCRA from Fred St. Louis and Own Data.
32

Banco Central de la República ArgenGna (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabiliza@on: Stage III 2. BCRA Reserves Dynamics: Agro Sector Has Paid Down Debt to Lows

Oilseeds and Grains Sector Exporter Debt Stock

El plan
Billionmonetario
USD
9
External Debt 8.2
8
Domestic Debt Agro Sector: Gross Export Receipts
7
6.2 6.2
are Trending firmly, while Debt
6 5.8
5.5 Repayment of 2.3 Billion Explains
5.3 5.5 5.4
5.0 5.0 4.9 Less Net Export Receipts from the
5
4.0
4.4 4.3 4.2 Sector
3.9 3.8
4 3.4 3.6 3.5
3.1 3.3 3.3
3.1 2.9 3.0
3 2.6

0
Dec-31-2007
Dec-31-2008
Dec-31-2009
Dec-31-2010
Dec-31-2011
Dec-31-2012
Dec-31-2013
Dec-31-2014
Dec-31-2015
Dec-31-2016
Dec-31-2017
Dec-31-2018
Dec-31-2019
Dec-31-2020
Dec-31-2021
Mar-31-2022
Jun-30-2022
Sep-30-2022
Dec-31-2022
Mar-31-2023
Jun-30-2023
Sep-30-2023
Dec-31-2023
Mar-31-2024
Jun-30-2024
Sep-30-2024
Dec-31-2024
12.31.07
12.31.08
12.31.09
12.31.10
12.31.11
12.31.12
12.31.13
12.31.14
12.31.15
12.31.16
12.31.17
12.31.18
12.31.19
12.31.20
12.31.21
03.31.22
06.30.22
09.30.22
12.31.22
03.31.23
06.30.23
09.30.23
12.31.23
03.31.24
04.30.24
05.31.24
06.30.24
Source | BCRA, INDEC & CNV.
33

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 3. FX Gap Dynamics: Importer Debt Stock Repayments (not FX-sensitive Flows)

Parallel FX Market (CCL) Parallel FX Market (CCL) RaZo of Importer Payments (Formal and
Financial Flows, Daily Average Trade Flows, Daily Average Informal FX Markets) to Imports
%
Billion USD Billion USD 140
5 5
Total Inflows (Supply of USD) Exporter (G&S) Supply of USD​ 120
4 Total Outflows (Demand for USD) 4 Importer (Goods) Demand for USD​
Net Net
3 3 100

2 2
80
1 1
60
0 0
40
-1 -1
Imports Payment in the Exchange Market/Import

-2 -2 20 (Imports Payment in the Exchange Market + Alternative FX Market)/Import

(Imports Payment in the Exchange Market + Alternative FX Market + BOPREAL)/Import
-3 -3
0

Jan-20

May-20

Jan-21

May-21

Jan-22

May-22

Jan-23

May-23

Jan-24

May-24
Sep-20

Sep-21

Sep-22

Sep-23
-4 -4
Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24

Note | Data as of June 28th. Source | BCRA.

Source | CNV and BCRA.

Importer Payments Through CCL (Now Waning) Excess Demand in Parallel FX Market: Since March, Importers are
Has Added Demand Pressure on FX Gap Paying More than a Full Months' of Import (Paying DOWN Debt)
34

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 3. FX Gap Dynamics: Domes7c Poli7cs & External EM Risk

Argentine Government Debt Spreads and FX GAP Regional Country Risk

Cumulative Change since 07/01/2023
El plan monetario Basis points Basis points
1,000 200
Argentina

LATAM excl. Argentina (right axis)

500 100

0 0

-500 -100

-1,000 -200
Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24

Source | Bloomberg. Note | LATAM excl. Argentina: Simple Average of Brazil, Colombia, Mexico, Peru, Chile,
Paraguay and Ecuador.
Source | Bloomberg.
35

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 3. FX Gap Dynamics: Seasonal Import Payments

Energy Sector Import Payments

Official FX Market

Billion USD
Average 2010-2023 2024
1.0

0.9

0.8
0.7
0.7

0.6
0.5
0.5

0.4
0.3
0.4 0.4
0.3

0.2 0.3

0.1

0.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source | BCRA.
36

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 4. Price Level (RER): Wages are Low by Historical Standards, Margins are Wide

Sectoral Price to Salary Ratios Wholesale Price to Salary Ratio

Sector Dec-15 Mar-18 Mar-19 Jul-23 Nov-23 Mar-24 May-24
Electrical Equipment Manufacturing 100 104 128 165 187 241 213
Publishing Activities 100 108 122 180 205 220 212
Petroleum Products 100 139 139 108 102 186 181
Paper Products 100 95 114 139 151 199 181
Chemical Products 100 106 136 145 159 189 178
Machinery and Equipment Manufacturing 100 97 116 148 166 195 173
Tobacco Products 100 111 110 124 120 172 171
Basic Metals 100 102 122 138 127 190 171
Other Non-Metallic Mineral Products 100 98 134 135 146 181 168
Fabricated Metal Products 100 94 111 139 152 183 161
Rubber and Plastic Products 100 96 121 150 165 183 161
Motor Vehicle Manufacturing 100 92 125 138 154 176 159
Furniture Manufacturing 100 81 102 126 154 161 142
Other Transport Equipment Manufacturing 100 82 97 125 130 136 133
Textile Products 100 99 127 135 132 138 124
Medical Instruments Manufacturing 100 82 98 97 112 133 124
Wood Products 100 85 99 120 138 136 124
Food Products 100 100 114 106 115 129 121
Apparel Manufacturing 100 86 97 119 128 116 103
Leather Products 100 82 83 88 97 92 82
Radio and Television Equipment Manufacturing 100 70 82 38 33 50 44

Note | The value for May is an estimate based on wage projections for April and May.
Source | BCRA from INDEC Data. Source | BCRA from INDEC Data.
37

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Macro Stabilization: Stage III 5. Price Level (RER): Lessons Learned – A Fiscal Anchor Makes a Difference

Primary Balance of the Non-Financial Public Sector

% of GDP
4

2
2.6

0
-0.4
-2.3 -2.4 -2.7
-3.0
-2 -4.2 -3.8

-6.4
-4

-6

-8
2016 2017 2018 2019 2020 2021 2022 2023 Jan/
May
2024
Note | Jan/May 2024: Seasonally Adjusted Annualized Primary Balance
Source | BCRA and Ministry of Economy.

38

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda

Stage I, II, & III: Promoting Private Sector-Led Growth: Market Incentives
1 | Initiatives to Support Growth, Employment & Competitiveness
• Fiscal Package # 27,743
• Foundations Law # 27,742 ("Ley Bases"): State, Labor & Energy Reform and RIGI Regime
2 | Private Sector Announcements of Large Investments Linked to Approval of RIGI
3 | Reform Initiatives + New Ministry of Deregulation & Transformation

Stage I, II, & III: Tapping Private Sector Potential & Political/Popular Support
4 | Energy Sector Expansion: A Structural Improvement for the Balance of Payments
5 | Healthy Balance Sheets: Low External Indebtedness of the Corporate Sector
6 | Crowding In: Low Domesgc Bank Credit Exposure to Corporates and Households
7 | Broadening Commitments: Declaragon of May (President and 18 Provincial Governors)
8 | High Popular Support for the Reform Process Amid Economic Adjustment
Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 1. Initiatives to Support Growth, Employment and Competitiveness

Recently Enacted Fiscal Package Law 27,743

§ Reinstatement of the Personal Income Tax in specific tax brackets

§ Launching Tax Moratorium for up to 70% of interest and installments of up to 84 Months

§ Asset Tax moratorium with 5% tax penalty > USD 100,000

§ Reduction or Elimination Different Taxes

§ Personal asset tax: Phasing out through 2027, optional one-off personal asset tax payment for 2023-2027
at discounted 0.45%/0.50% rate alongside tax stability shield through 2038;
§ Elimination of real estate transfer tax (ITI),
§ Update to the simplified tax regime for small businesses or self-employed

§ Framework to provide greater transparency related to the tax burden affecting consumers/taxpayers.

§ Establishment of minimum threshold for automatic tax withholdings.

40

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 1. Ini7a7ves to Support Growth, Employment and Compe77veness

Recently Enacted Foundations Law 27,742 (“Ley Bases”)

1. CHAPTER ON STATE REFORM
§ Modification or Elimination of Competencies, Functions or Responsibilities and the Legal Structure of
Some Public Organizations and Trust Funds
§ Privatization of Certain Public Enterprises
§ Reform of the Administrative Procedure Law 19,549 (to Streamline the State)
§ Framework for the Review of Public Employment
§ Concessions to Private Sector of Public Infrastructure (Built, Works) or Public Services
2. CHAPTER ON LABOR REFORM
§ Regularize Unregistered or Poorly Registered Labor Relations and Simplify Registration
§ Extends to 6-month Labor Trial Period (1 Year in Firms with up to 5 Employees)
§ Possibility of Replacing Final Compensation with a Fund or Termination of Employment System
§ Independent Workers can Subcontract up to 3 Independent Workers.
§ Definition of Objective Causes for Dismissal
41

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 1. Initiatives to Support Growth, Employment and Competitiveness

Recently Enacted Foundations Law 27,742 (“Ley Bases”)

3. CHAPTER ON ENERGY SECTOR

§ Business Friendly Legal Framework Promoting Infrastructure Development, Free Trade and no State
Intervention in Local Fuel Prices and Unification of Gas and Electricity Regulatory Entities
4. CHAPTER ON LARGE INVESTMENT - INCENTIVE REGIME (RIGI for > USD 200 M)
§ Free Trade Granted. Right to Pay Profits, Dividends and Interest. Regulatory Stability in Tax, Customs and
Exchange Matters.
§ Tax Benefits: Income Tax of 25% (Tax on Debits and Credits in Bank Accounts Will be Considered as Income Tax
Credits). Certain Beneficial Income Tax Amortizations Periods. VAT Payments with Tax Credit Certificates.
Import Duties Exemption for Imports of New Capital Goods, Spare Parts, Parts, Components and Consumer
Goods, as well as Temporary Imports. Exports Duties Exemption after 3 Years (2 Years if They are Very Large-
Scale Projects).
§ FX access Benefits: Gradual Export Proceeds Exemption from the Obligation of Entry and/or Negotiation and
Settlement in the Local Exchange Market. Foreign Currency from Local or External Financing are Freely Available.
42

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 2. Private Sector Announcements following Approval of RIGI Regime

Main Investment Opportunities in the Energy Sector

Some Announcements Across

Sectors

1. Posco USD 800 million for

Litio
2. SIDERSA USD 300 million
3. Genneia USD 250 million
4. Tech Firms USD 1 Billion

*Million USD for Each GW of Installed Wind Power. Source | @Finanzas Argy.
Source | BCRA From Ministry of Economy
43

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 3. Reform Initiatives & New Ministry of Deregulation & Transformation

Foreign Trade Deregulation and Cost Reduction Initiatives

§ Transparency: Eliminating the opaque SIRA system to the more streamlined SEDI that includes an automatic
payment schedule based on priorities and elimination of the SIRASE system with a 30 days payment
schedule
§ Increased Efficiency: Eliminating the requirement to undergo arbitrary controls to each container loaded
with labeled and antidumping regime products.
§ Reduction of Financial Cost: Reduction of witholding on VAT and income tax applied to food, hygiene
products, and medication for 120 days.
§ Reduction of Tariffs Rates: Reducing import tariff on industrial matrices, metals (35% to 12.6%) and plastic
(24.% to 12.6%), fertilizers (3.6-6.0% to 0%), herbicides (35% to 12.6%), tires (35% to 16%), plastic inputs
(12.6% to 6%) and big-ticket household appliances (35% to 20%).
§ Flexibility: Increasing limits for importing by courier from USD1.000 to USD3.000.

44

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 3. Reform Initiatives & New Ministry of Deregulation & Transformation

Market Deregulation + State Streamlining + Creation of Ministry of Deregulation & Transformation

§ State Reform (Including Public Employment Reduction at the National Level)

§ Reduction of the Tax Burden on Imported Basic Consumption Goods.
§ Elimination of Government Price Control Programs (Which Affected Products of the Basic Consumer Basket,
Prepaid Medicine and Fuels, Among Others)
§ Regulated Public Service Rates Were Significantly Updated
§ Deregulation of Real Estate Rentals Market, Tourism (Agencies) and Health Sector
§ CREATION OF THE MINISTRY OF DEREGULATION AND TRANSFORMATION
§ Deregulation and Competition Incentives in the Airline Sector (Open Skys): Free Access to the Local Market
for New Companies without Bureaucracy, Free Competition Between Airlines, Tariff Deregulation, Free
Setting of Frequencies, Transparency in the Allocation of Space at Airports.
§ Closure of 136 automotive property registries and 12 in approval process

45

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 4. Energy Sector Expansion: A Structural Improvement for the Balance of Payments

Projected Energy Trade Balance

Billion USD
35
Projection
30
Balance
25 Exports

20 Imports

15

10

-5

-10
2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030
Source | BCRA from INDEC and Secretary of Energy Data.
46

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 5. Healthy Balance Sheets: Low External Indebtedness of the Corporate Sector

Leverage Ratios of Publicly Traded Argentine Corporates

El plan monetario Net Debt Ratio = (Gross Debt – Cash) / EBITDA

Net Leverage 2Q19 4Q19 2Q20 4Q20 2Q21 4Q21 2Q22 4Q22 2Q23 4Q23 1Q24

YPF 2.0x 2.2x 3.0x 5.0x 2.7x 1.6x 1.3x 1.2x 1.4x 1.7x 1.7x

Vista 1.6x 1.1x 2.4x 3.5x 1.7x 0.8x 0.6x 0.4x 0.5x 0.5x 0.6x
TGS 0.7x 0.8x 0.8x 0.9x 0.6x 0.3x 0.2x 0.2x -0.1x 0.1x 0.1x

TGN 0.4x 0.3x 0.1x 0.2x 0.5x -0.9x -1.1x 0.4x -0.8x -0.8x -3.5x

Transener 0.2x 0.1x 0.1x -0.1x 0.0x -0.6x -0.2x -0.6x -0.3x -0.3x -0.6x
Pampa Energía 1.8x 1.8x 2.2x 2.1x 1.6x 1.3x 1.3x 1.2x 1.1x 0.9x 1.1x

Central Puerto 1.1x 1.5x 1.4x 2.4x 2.1x 1.5x 1.2x 0.8x 0.3x 0.8x 1.1x

GEMSA 2.5x 3.3x 3.5x 3.8x 4.8x 5.1x 4.4x 4.9x 5.8x 6.3x 6.6x

MSU Energy 8.3x 8.1x 7.9x 6.3x 5.0x 4.7x 4.8x 4.9x 4.9x 4.8x 4.7x

Genneia 4.4x 3.5x 3.3x 3.4x 3.0x 2.8x 2.8x 2.8x 3.2x 3.3x

YPF Luz 3.5x 3.9x 3.9x 3.1x 2.3x 2.1x 2.1x 2.0x 2.1x 2.2x

Telecom Arg 1.3x 1.6x 1.5x 1.8x 1.8x 2.0x 2.1x 2.2x 2.3x 3.2x 2.4x

Loma Negra 0.8x 0.8x 1.2x 0.1x 0.1x -0.1x 0.0x 0.4x 0.8x 0.9x 1.3x

Ternium Arg 0.8x 0.1x -0.4x -0.9x -0.6x -0.8x -1.0x -1.2x -1.0x -1.1x -1.4x Note | Leverage = Net Debt / EBITDA
IRSA 2.6x 3.6x 4.5x 2.6x 4.6x 5.6x 1.7x 1.4x 1.8x 1.3x 1.5x Net Debt = Gross Debt – Cash and Equivalents
Source | Latin Securities.
47

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 6. Crowding In: Low Domestic Bank Credit Exposure to Corporates and Households

Total Debt of Non-financial Corporates and Households Loans to the Private Sector
El plan monetario
Total stock of debt in terms of GDP (%) In Terms of GDP (%)

Note | In Addition to Bank Credit, It Includes Other Types of Non-bank Financing (eg Domestic
Negotiable Obligations, Foreign Loans and Bonds, Checks, Other Credit Providers, Non-bank *Calculated Using the 3 Months Moving Average of Seasonally Adjusted GDP.
Credit Cards, FGS-ANSeS Loans, etc.). Source | BCRA.
Source | BCRA. 48

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 7. Broadening Commitments: Declaration of May (President & 18 Provincial Governors)

Declaration of May (“Pacto de Mayo”): Federal & Provincial Government Agreement

1. Protection of Private Property.

2. Non-negotiable Commitment to Fiscal Balance.
3. Reduction of General Government Spending to 25% of GDP.
4. High Quality Education: Initial, Primary and High School; 100% Literacy, 0% Dropout Rate.
5. Tax Reform to Reduce Tax Burden, Simplify the System and Promote Trade.
6. Proposal for a Federal Tax Sharing System with Provinces, Fostering Responsibility and Progress.
7. Prioritize Exploitation of Natural Resources Endowment.
8. Modern Labor Reform, Oriented to Promotes Labor Formality.
9. Pension Reform Aimed at a Sustainable System that Prioritizes Pensioners Compliant with Deductions.
10. Openness to International Trade.

Note | The Pact Was Signed on July 9th by the President of the Nation and by 18/24 Governors of Subnational Districts. Only 6 Governors of Provinces did Not Sign it: Buenos Aires, La Pampa, Formosa, Tierra
del Fuego, La Rioja y Santa Cruz (whose governor would later sign it).
49

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Micro Growth Agenda 8. High Popular Support for the Reform Process Amid Economic Adjustment

Confidence in Government Ratio Confidence in Government Index (Dec-01=100)

and Consumer Confidence Index (Dec-01=100)
Index Néstor Alberto
Cristina Mauricio Javier Ratio Néstor Cristina Mauricio Alberto Javier
450 Kirchner Kirchner Macri Fernández Milei50 Kirchner
Kirchner Macri Fernández Milei
COVID-19 350
400 COVID-19
49,8
350 300
49,6
300
49,4 250
250
49,2 200
200
49
150 150
48,8
100
100
50 48,6

0 48,4 50

Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Jun-24
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Jun-24
Source | BCRA from Universidad Torcuato Di Tella data. Source | BCRA from Universidad Torcuato Di Tella data.

Electoral Enthusiasm: 7-Months into the Administration, Political Leadership: Confidence in Milei's Administration
Confidence in Milei's Administration Stands High as (adjusted for Consumers' Perception of the Economy) is
Usually (but not Always) Occurs Following an Election. Extraordinary, Exceeding that of 5 Preceding Administrations.
50

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA
Argentina´s Stabilization Program: Phase 2

Thank You

51

Banco Central de la República Argentina (BCRA) New York, July 2024 Vladimir Werning, Deputy Governor BCRA