He who does not know how to dissemble, does not know how to reign. Mythology says so. And he exercises it President Javier Milei, which in the last hours turned on the machine of the decrees of necessity and urgency again, on a Saturday. Also his minister, Luis Toto Caputo.
It was the head of the Treasury Palace who, very early on, decided to publish in the official bulletin a small piece of trash in the eye of supposed libertarian pride: more debt. Known, the common denominator of both, the lack of dollars, what a problem, has marked the last days of the Government.
Necessity and urgency, it seems, exist. Through DNU 23/2024, the Casa Rosada sent an order to the Central Bank: that is, that its owner Santiago Bausili, lend the National Treasury about US$3.2 billion, with a 10-year term and to pay debts in foreign currency. Of course, the loan implies something in return: the National Treasury will give the BCRA Non-Transferable Letters maturing in 2034.
So that it is understood, the dollars from the BCRA reserves will go to the Treasury and Minister Luis Caputo, in exchange, leaves them a bond until 2038 that cannot be transferred or liquidated (there is no put, of course). Change of creditor? Exact.
Dress me quickly because I’m in a hurry: from Javier Milei to the BCRA
The fact to keep in mind is that this mechanism goes against what the National Constitution provides (sanction), hence the urgency seems to refer to the fact that there is an imperative to pay the debt here and now, and that there is no time to feed bureaucratic circuits. There are US$ 3,200 million that, they infer in the Casa Rosada, can be requested because in recent weeks the Central Bank managed to accumulate net reserves, practically taking them to positive territory until they fell again as a result of the payment to the IMF.
Yesterday, President Milei uploaded a post to the social network disbursement of 792 million dollars scheduled for June. The IMF determined that the primary surplus was four times higher than expected, that the Central Bank’s reserves accumulated more than 2,000 million dollars than stipulated at the time and that the monetary issue was within the established limits.
However, today the Government enabled the castling described above: go through the cashier to look for US$3.2 billion and return it in 10 years. Because yes, because it can and thanks to the monetary issue used in previous weeks.
Rollover and more debt: stocks for ever
In the same DNU there is a yapa: all interest services and amortization of other Non-Transferable Treasury Bills that the BCRA has in its possession (it is estimated that it has about US$ 68.5 billion), as well as those issued this year, “will be replaced, at their expiration date, by new public securities whose conditions will be defined, together, by the Secretariats of Finance and the Secretary of the Treasury, both from the Ministry of Economy,” says the Decree.
As can be understood, The Government seems willing to maintain the stocks from now on for as long as necessary. Yesterday, the Institute of International Finance estimated that the full liberalization of the foreign exchange market (the lifting of the stocks), “which should pave the way for a recovery in growth, would require an additional $10 billion in reserves”. To this we must add that thanks to the exchange rate, the BCRA was able to keep a good part of the net reserves that it has today, while another part would lose them during the year as a result of the “blend” liquidation that exports must do through the CCL. and which, it is calculated, will be the equivalent of 80% of the trade balance, about US$25,000 million.
Source: Ambito
