Misunderstanding Eurobond economicsDear Editor,ONE of the biggest misunderstandings is that we need to find $750 million next year given that the 2012 $750m Eurobond is falling due. This is a complete misunderstanding of the reading of what economists call the Balance of Payments Accounts.Remember that in any given year, we receive foreign exchange (US dollars) from all sorts of things: traditional exports (copper, cobalt etc), non-traditional exports (agric, etc), portfolio investment inflows, foreign direct investment (FDI) inflows, remittances, etc. From these inflows, we need to net-off outflows (paying for imports, portfolio outflows, external debt service, etc…).In 2019 (the latest year for which we have these projections), the IMF made projections on what one could reasonably expect the difference of forex inflows and outflows to be over the period 2022 to 2024 (even taking into account the payment of the $750m and $1 billion Eurobonds due in 2022 and 2024).What were their projections?Well, they found that […]
Misunderstanding Eurobond economics
