The situation of the debt in pesos raises crucial questions about its value and sustainability. To understand this complex issue, it is essential to analyze the numbers provided by INDEC and the Debt Office.
As of June 30, 2023, the debt represented 88% of the Gross Domestic Product (GDP), broken down into 32% with the private sector, 19% with international organizations and the remaining 49% within the public sector.
However, the methodology used to calculate these percentages presents a problem, since it uses GDP in current AR$ divided by the exchange rate as of June 30, without considering the high inflation that distorts this figure.
According to the economist John Snow and a thread dedicated to the subject on Twitter (now X), in absolute terms, the debt with private parties amounts to approximately US$135 billion, of which some US$81 billion correspond to dollar bonds.
However, given that the debt is trading at 25% of its face value, its market value is reduced to US$20 billion, rerepresenting only 3.15% of the Gross Domestic Product (GDP). “This figure is quite insignificant compared to nominal estimates,” she warns.
Regarding the possibility of haircuts, consider reducing a debt that is nominally equivalent to 12.5% of GDP to 6%, 3.5% or 1.2% respectively, seems unreasonable. Creditors would not accept such haircuts, since Argentina has the capacity to pay more, with interest on the debt representing only 1.2% of GDP at 10%.
When observing the ratios after the 2005 restructuring, private debt was significantly reduced, going from 45% to 20% of GDP today. However, It is crucial to consider the impact of the exchange rate, which has changed since then, adjusting the ratios to obtain a more accurate picture. Currently, the bonds represent less than 3 months of exports and an additional issuance is discounted to comply with Ocampo’s plan.
In conclusion, the debt with private parties in Argentina seems to have a reduced nominal value in relation to GDP, representing an insignificant percentage, and its interest burden is below the inflation of the United StatesSnow warns. Although different future scenarios can be explored, it is essential to take into account the comparison with the debt situation in the past and the importance of addressing the peso debt of the private sector.
The risks posed by the market
Some analysts argue that intrastate debtshould be excluded from the calculation of external debt. This is because it does not represent an obligation with external creditors.
However, others maintain that intrastate debt It is a real liability that must be taken into account. This is because it can have a significant impact on the government’s ability to meet its external obligations.
Ultimately, the decision whether intrastate debt should be excluded from the external debt calculation is a matter of interpretation. However, It is important to consider this factor when analyzing debt sustainability.
Likewise, other experts warn that since the majority of this debt is in the hands of the private sector, there is a risk that, faced with an event like next Sunday (elections), the uncertainty that the government will not be able to renew the maturities will increase. .
The situation would worsen If the Government decides to settle it with monetary issue, since it would add more pressure to an already very high inflationary dynamic. This would mean that if the nominal value of the economy worsens and voluntary financing disappears, the next government will choose to restructure rather than assume the socioeconomic costs of honoring the debt.
Source: Ambito
