The policy of the economic team he leads Luis Caputo to transfer the debt from the Central Bank to the Treasury of the Nation is generating some doubts among operators of markets regarding their sustainability.
The problem is if a scenario similar to the one that occurred throughout 2022 and 2023 is generated, and it is what is called “maturity wall”, which in the second half of last year and in the first months of the current period seems to have been resolved, with the exception that there is now a fiscal surplus.
Debt: the maturities that accumulate to the Treasury
He June 30th The Treasury will have to face maturities in pesos of public securities for $2.4 billion from a dual bond, a discount for $115,000 million, and interest from a quasipar $142,110 million.
Furthermore, before that, on June 13 you have to pay interest on Boncer T5X4 for $17,266 million and on Boncer T3X5 for $13,333. AND On June 14, Lecaps expire for $3.6 billion.
These are high maturities that in the market, the Government is supposed to have no problems in rolling and, in turn, obtain net financing.
Meanwhile, in dollars, the government’s most important maturity is with multilateral organizations for US$134 million throughout the month. It is understood that the Treasury is going to go out and roll these maturities and in turn raise more funds from the banks that, otherwise, would end up in the BCRA.
The economist Luciana Flores warns in an article on the matter that “the sum of the real public debt plus the debt of the Central Bank, plus the commercial debt, from the beginning of the administration until today, “It has been increasing at a dizzying pace, and at some point this has to stop.”
Public debt, the counterpart of the BCRA’s consolidation
“Because, at the end of the day, the entire program of adjustment and stabilization, reduction of inflation, fiscal surplus and consolidation of the Central Bank seems to be merely the counterpart of the increase in public debt, which transforms it into a program of dubious effectiveness and sustainability,” he warns.
To this end, it states that the debt in local currency expressed in dollars has been growing in the following way this year according to data from the Ministry of Finance: in December it was US$104,000 million; in January, US$111,000 million; February, US$125,000 million; March, US$142,000 million and April, US$155,000 million. That is, since the current government took office, the debt in pesos has grown by US$55,000 million.
Eugenio Marí, chief economist of the Freedom and Progress Foundation considers that to avoid scenarios of doubts in the markets it will be necessary that ““the government reaches 2025 with the country risk well reaching 1000 points.” That would allow him to return to the voluntary markets. Next year is going to be essential because there are very strong maturities in dollars.
How sustainable is the Treasury plan
“It is evident that the Treasury maturities are going to accumulate again. But I would see the consolidation of the public sector, including the Central Bank debt. Maintaining the fiscal surplus and with a Treasury that can honor its debt, it begins to be credible,” he explained.
The Libertad y Progreso economist maintained that the government’s fundamental goal is to turn off the two engines of inflation, which are the fiscal deficit and the interest on the Central Bank debt; by passing everything to the Treasury, it turns off one of the engines.
Quantum Finance, the consulting firm run by Daniel Marx, proposes something similar that Marí al indicate that the issuance of Capitalizable Letters (LECAPS) carried out by the Treasury to keep the BCRA debt ““It does not alter the stock of consolidated debt.”
“To some extent transparent the indirect debt that the Treasury had in recent years via monetary financing from the BCRA and its sterilization with securities issued by that entity,” says Quantum.
The consultant warns, however, that “This operation reduces the quasi-fiscal deficit, but increases the fiscal one.”
“As LECAPs are instruments issued at a discount, Interest payments are not computed in the primary fiscal deficit, although they require a greater fiscal surplus or greater market financing to meet maturities without issuance,” the consulting firm warned.
Source: Ambito
