The Supreme Court of Justice of the Nation suspended the hearing set for this Wednesday in the framework of the case that addresses the conflict between the Mendoza Province and the Central Bank of the Argentine Republic (BCRA) for access to official exchange market (MULC) by the provincial government to pay debts.
The reason for the suspension is that the total payment of the debt was approved by the province through the MULC due to the fact that the conditions in which the restructuring of this indebtedness was agreed upon allow it. Although the maturity that it will have to face this month is US$45.4 millionwhich expire on September 19.
The reasons for the measure and the reaction of the provinces
Until June of this year, the provinces were financed through the official market (MULC) and they did not want to touch their holdings in dollars, which they have in many cases, said a source consulted by this medium at the time the regulation was issued. And he explained that, until the middle of the year, the BCRA had not established for provinces no restrictions in this complex context, in which there had been a sharp drop in exports due to the drought.
It was there when the Central decided to regulate that, as of June 2 of this year, the debt payment of the administrations provincial with official dollar and provided that they can access the market to pay 40% of the due date in this way and the remaining 60% of their debts in foreign currency with their own dollars. But this rule applies as long as that 60% is restructured to an average life of two years.
In this scenario, as a voice close to the Government explained, the governors were asked to make an effort. Several provinces opposed the measure, including Mendoza (another well-known case was that of Córdoba), who had gone to the Supreme Court to request the unconstitutionality of that regulation.
However, the point referring to the duration of the payment program was key in the Mendoza casesince it is a restructured debt to five years in 2020, that is, it foresees maturities until 2025.
Mendoza debt: how was the approval process
Consequently, as he learned Ambitthe province presented itself to the National Bank under the terms of the regulations of the BCRA and, with the validation of the aforementioned commercial entity, you will be able to access the exchange market to face the debt maturity that you have to cover on September 19.
To access those Dollarsas provided by the regulations, Mendoza made a presentation to the National Bankwhich acts as its financial agent, and, after analyzing the documentation submitted, the entity assessed that it complies with the BCRA regulation regarding access to the market for the payment of debts, which establishes the requirement to restructure 60% of debt for a minimum of two years.
Since, as noted, in the case of Mendozathe Payments that he must face correspond to a restructured debt in 2020 at five years, it was given the go-ahead and can access the market for full cancellation of the next maturity.
In view of this, the Supreme Court decided to suspend the hearing scheduled for this Wednesday, September 6.