In addition to that 2% net financing in the local marketthe draft also specifies which instruments will be privileged in the general financial strategy. “In line with the projected disinflation process, we expect to gradually reduce the dependence on inflation-linked instruments, expand the portfolio of benchmark domestic securities and lengthen the maturity profile”says the document. This was also ratified by official sources to Ámbito, although they warned that it is “desirable” to happen but that reality will impose its own dynamics on the financial strategy, which will depend mainly on how the macroeconomy is organized and, at the same time, on how the program evolves.
Inflation estimates are located in a range of 38 to 48% by 2022with a goal of gradual reduction of about 5 percentage points in subsequent years.
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This goal of 2% annual net financing is in line with calculations by private analysts. As Ámbito reported a few weeks ago, a report by the consulting firm delphos-investment estimated that the financial needs in pesos add up to 3.4% of GDP during 2022. “Considering that the monetary issue goal to assist the Treasury is 1% of GDP, there remains a financing gap of 2.4%, which will have to be covered by placements in pesos in the local market and financing from multilateral development banks. and bilateral loans (0.3/0.4% of GDP)”analyzed the consultant.
In this scenario predicted by Delphos, the Treasury should place on the market the equivalent of 2.1% of GDP this year. “In terms of refinancing, we estimate that Average roll over rates close to 120% of principal and interest maturities would be required (around $5.3 trillion for all of 2022), depending on the term and characteristics of the instruments placed”, they projected.
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In this line, the economist Federico Furiasedirector of Anker and professor at UTDT, analyzed that, in order to achieve this objective, “it is key that banks continue to rotate their portfolio from interest-bearing liabilities to treasury bills”. Furthermore, he warned about “two problems”.
“The rotation ends up being monetarily expansive, because it implies a disarmament of remunerated liabilities”explains Furiase and expands: “When the Treasury uses those pesos, a new monetary issue, then that puts pressure on you again on how it is sterilized and that it does not impact the exchange rate gap”. “And, on the other hand, -continues the economist- continues to add fuel to debt in pesoswhere 75% is indexed to inflation, has a duration of 1 year and This equation results in large debt maturities indexed in the very short term, which can only be rolled because on the other side there is a very hard trap.”. “At the time they want to remove the stocks, those maturities would imply a higher currency risk”, warns the economist.
Source: Ambito
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