The Government will face an aggressive strategy to dry up the peso market. They will seek to migrate the remunerated liabilities of the BCRA towards Treasury placements. What is the joint strategy that will be launched about?
He The Ministry of Economy will release this Monday the details of the call for the Treasury tender which is scheduled for 20th of this month. On Friday afternoon the Treasury Palace announced that there will be thirty-day public debt instrumentswhich suggests that the operation to disarm the Leliqs. At the same time, the Central Bank prepares the implementation of the Bonds for the Reconstruction of a Free Argentina (BOPREAL)an instrument that can be subscribed exclusively to importers who prove commercial debt. According to official sources told Ámbito, the Government will undertake a “vacuum plan” to dry out the peso market. There will be a joint strategy between the BCRA and the Palace of Tax authorities.
To describe the financial plan, the Government uses the image of a bridge. “Today we have many pesos and few dollars, but we know that going forward, with the fiscal adjustment and exchange competitiveness, that account will be reversed,” a senior source from the economic team told Ámbito. In summary, that is the BCRA’s explanation for placing a title that can be integrated in pesos, but that is payable in dollars at a rate of 5% annually.
If the growth of commercial debt in 2023 was about US$ 25,000 million, as indicated by different private surveys, the central bank could be made from the equivalent of that liquidity in pesos through importing companies that agree to subscribe to the BOPREAL. For their part, if they need the foreign currency to cancel a payment abroad, the firms could negotiate that bond in the secondary market to have the bills.
In the last few hours, the strategy was questioned by economists from various sectors. For example, the former member of the BCRA board, Jorge Carrera, He said in his X account that Commercial debt does not belong to the monetary entity, but to private individuals and that this was taken “knowing the possible scenarios derived from a change of government that could increase taxes or split the market.”
The Central Bank rejects the accusation of an alleged “nationalization of private debt,” arguing that sooner or later, importers will have to access the exchange market to pay for purchases abroad already made and also for new ones. They also claim that the firms were “forced” to go into debt because the access deadlines established in the permits granted by the Ministry of Commerce were not met.
The “dollarization of the Leliq”
That whole chapter is very debatable. There are opinions for all tastes. But the former Secretary of Economic Policy, Fernando Morra, He put the magnifying glass on another axis. He argued in a report by the consulting firm Suramericana that the strategy focuses on modifying the structure of the BCRA’s debt. Since a large part of the weights of the companies that can potentially subscribe to BOPREAL are in investments backed today by remunerated liabilities: “It is a dollarization of the Leliq,” he summarized.
The former official with close ties to Martín Guzmán maintained that the strategy is complemented by a penalty to short-term liquidity. The renewal of the Leliq is partial and the rate for Passive Passes was reduced. This combo, in short, forces financial entities to partially migrate their pesos to Treasury securities to improve their returns.
This analysis is in line with what the Ministry of Economy anticipated this Friday in an official statement: in Wednesday’s tender, Public Debt Instruments will be offered with a 30-day term. The details of the call will be published this Monday by the Finance Secretary that drives Ptoblo Quirno, but it is clear that it is a joint strategy.
The Government polishes the vacuum cleaner and part of that plan is to effectively migrate remunerated liabilities towards Treasury placements. President Milei It goes even further and despite the deficit in public accounts, it says that the resources obtained from the tenders should be used immediately to pay off debt with the Central Bank.
Everything looks like a joint strategy to dry up the peso market. Qualified sources from the monetary authority detail that “the balance sheet of the Treasury and that of the Central Bank are closely linked” and that that is why the “close relationship that officials have with the Ministry of Economy will be essential.” Without going further, Luis Caputo and Santiago Bausili They were partners in the consulting firm Anker until a few weeks ago.
And the independence of the Central Bank? In the Government they argue that independence will not be given by the proximity or distance of the officials on duty but because the Central Bank will no longer finance the Treasury.
Source: Ambito
