The FGS is mentioned as one of the most relevant assets in Argentina, which in turn has been used on various occasions as a financial tool for speculative purposes.. This is a fund created in 2007 by Decree 897 and is understood as a countercyclical instrument to provide sustainability to the retirement system in critical economic periods.
In 2008, after the management of Cristina Fernández de Kirchner resolved the nationalization of the AFJP and unified the retirement regimes in the Argentine Integrated Pension System (SIPA), all funds and investments of the capitalization system became part of the FGS. “If they are going to use it for when retirements, pensions, family allowances and the rest of the Social Security benefits are below inflation, then what was created will be useful there,” he explains. Facundo Fernandez Pastorlawyer specializing in Social Security.
In any case, for the professional or in the government of Alberto Fernandez Not even in Mauricio Macri’s case was the FGS used for this purpose. Although this is supported by theory, for an ANSES worker who prefers to protect the off, in practice its use is mostly linked to the “great power to finance the development of Argentina” and not to the payment of pensions because part of the FGS “consists in government bonds. Furthermore, as detailed by this source, around 17% of the FGS is made up of company shares, as well as fixed terms, negotiable obligations, common investment funds, financial trusts and loans to provinces.
Last month the FGS reached the highest value in historical terms, with US$76,000 million, that is, 117% more compared to the same month in 2019. The regulations indicate that the valuation must be carried out at the official wholesale exchange rate, however, the increase in financial exchange rates was also verified. Particularly, the value of the shares amounted to $13.1 billion, an increase of 254% during the same period.
According to the organization run by Fernanda Raverta, the current management leaves “the best valuation in the history of the investment fund” and achieved “an important recovery in productive projects.” In this sense, the source consulted in voiceover highlights that it is the only financial agent of the State that lends long term and has the capacity to finance “from Atucha (nuclear power plant) to YPF, or private productive ventures for the development of solar energy, wind energy and thermal generators, among other things.” The instrument’s participation in productive projects rose to 4.8%, exceeding the 3.8% left by the Macri administration.
Under this framework of composition and use, the possibility that transcended from the orbit of Luis Caputo Offering FGS assets as support for debt for around US$3 billion would be “covering up a gifted privatization and a scandalous transfer of income” since it would be about offering “Argentine assets that are in the hands of the State.”
Likewise, for Fernández Pastor the initiative would be hindered by legal obstacles, since Law No. 27,574 on “Defense of the assets of the Sustainability Guarantee Fund” should be modified, whose article No. 8 “establishes the prohibition of FGS funds.” abroad”. For the lawyer, the possible maneuver would only have the objective of “defrauding and fleeing the assets of the Fund.”
For its part, for Federico Machadoeconomist at the Observatory of Policies for the National Economy (OPEN), although putting an asset as collateral does not imply selling it – if it is valued, the Fund’s assets will continue to grow -, first “it is necessary to know what the fiscal plan is” since “Proposing a horizon of surplus and debt reduction is not the same as adjusting spending to reduce taxes and canceling debts with these assets in the future.”
Finally, regarding the impact of the valuation of the FGS on retirees, the economist of Empiria Consultores, Juan Paolicchi clarifies that an extraordinary income generated by the Fund “would not necessarily make a retiree earn more, since the one who finances “For retirees it is the Treasury itself, and the FGS money is fungible.” Furthermore, in that sense he remembers that 70% of the Fund is made up of intrastate debt.
Source: Ambito
