Since the government decided to use Capitalizable Lyrics (LECAPS) for refinance its debt in pesos, the weight of interest in the balance sheet decreased and improved public sector numbers. Between 2023 and the end of the current fiscal year of 2025 The 1% equivalent of GDP will be saved.
This is indicated by a study of Argentine Institute of Fiscal Analysis (Iaraf), based on the new agreement between Argentina and the IMF, which raised from 1.3% to 1.6% of GDP this fiscal surplus goal of this year.
Behind the numbers on the interests of the debt, Above all, the contracted in local currency, there is an attentive look of market operators, which begin to take into account the challenges of sustainability.
The government uses more and more Lecaps, than accountably do not register interest in interest, Because at the end of its validity, the holder takes capital more, or if it renews, everything becomes a new debt.
For that mechanism, he has achieved Keep the financial surplus this year. Otherwise, if I had continued using adjustable bonds and letters as a tool, It is very likely that the balance would give in red.
According to him Iaraf, this year, debt interest spending, which also includes adjustable instruments and dollar debt, would fall 0.26 points of the GDP compared to 2024so the fiscal result would end with a 0.37% surplus of GDP.
In 2023, debt interest expense represented 2.22% of GDP, Luis Caputo inherited by assuming. In 2024 it reduced it to 1.48% and this year it would close at 1.22%, accumulating a cut of a percentage point since it took control of public finances. However, in 2026 it would rise significantly again, to 2.24% of GDP, even exceeding the initial level. The reason: a particularly demanding maturge calendar, with payments relevant to the IMF, to dollars in dollars and obligations in still high pesos.
The Secretary of Finance, Pablo Quirno, He questioned a few days ago the analyzes ensures that the government hides interests behind the LECAPS. The official considered that It is counted as debt and that, in studies carried out by the Ministry of Economy, it would be sustainable.
For public debt to be sustainable, its growth must be maintained below the GDP expansion rate. Otherwise, sooner or later, its dynamic becomes unmanageable.
And one of the problems is that the interest rate is at higher levels than a month ago, prior to the Movement of the Central Bank and the Treasury Palace to withdraw LEFIS as an instrument to take daily liquidity.
The IMF report indicates that Argentina will go from a financial fiscal deficit of 5.5% of GDP in 2023, to a 0.32% surplus in 2024, at 0.37% in 2025 and a zero level in 2026.
An estimate of Cohen Financial Allies argues that The total debt stock in pesos (including Lecaps, Cer and Dollar Linked), is $ 175,707 million, which accrues an annual rate of 31.7%, and is equivalent to $ 56,304 million, which implies 6.5% of GDP. That is, it would be a point above this year’s growth. Financial operators will be attentive to that aspect of finance.
Source: Ambito
