By allowing provinces to issue their own Treasury Bills, they are given the opportunity to raise funds autonomously, without relying exclusively on the national government.
Through various communications issued by the central bank the guarantee was announced so that the provinces can issue Treasure letters. These are short-term debt instruments issued by governments to cover their temporary financial needs. This measure is intended to provide provinces with an additional financing option and help alleviate fiscal pressure.
By allowing provinces to issue their own Treasury Bills, they are given the opportunity to raise funds autonomously, without relying exclusively on the national government.
This measure comes at a time when many Argentine provinces are facing economic difficulties and need additional resources to finance their programs and projects. By issuing Treasury Bills, the provinces will be able to attract investment and funds from investors interested in obtaining short-term returns.
It should be noted that while this new issuance capacity provides provinces with greater financial flexibility, it also carries certain risks and responsibilities. The provinces must guarantee the soundness of their finances and meet their payment obligations to maintain investor confidence.
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Other measures of the Central Bank that target the provinces
The drought strengthened a context of shortage of dollars that Argentina suffers. Faced with this situation, the Central Bank (BCRA) has been taking various restrictive measures for access to the official exchange market for different economic sectors and this time it was up to the provinces. And it is that, for debt payments in foreign currency, the monetary regulator will allow access to the official exchange rate only for 40% of the total amount of maturities and the provincial governments must refinance the remaining 60% or settle it with their own funds. .
“This implies that the provinces must access an exchange rate that is worth almost double the official one because they have to go to the financial dollar to pay their debt,” he points out to Ambit Nadín Argañaraz, economist and president of the Argentine Institute of Fiscal Analysis (IARAF). Each province will evaluate, according to its conditions (whether it has resources or not), how it will face the maturity of its debt to from this measure of the Central.
However, he points out that the most affected provinces will be those whose capital maturities in hard currency are high with respect to the income they receive because they will have to access a dollar of greater value and the incidence will be stronger.
Source: Ambito
