Public debt reached a record of USD 396,539 million in December due to credits from the IMF and other organizations

The net disbursement of USD 3,984 million by the IMF and USD 1,618 million by other organizations, plus parity adjustments, explained almost half of the increase in public debt in December (Reuters)

The Ministry of Finance reported that in the last month of 2022 the gross debt stock of the Central Administration amounted to a total amount equivalent to USD 396,539 million, of which USD 394,047 million was in a normal payment situation.

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The official statement adds that “33% of the debt in a situation of normal payment is payable in local currency while the remaining 67% in foreign currency.” Compared to the previous month, the total debt of the Central Administration increased by the equivalent of USD 11,846 million, representing a monthly growth of 3.1 percent.

“The variation is explained by the increase in debt in foreign currency in USD 6,308 million and in the equivalent of USD 5,538 million the debt in local currency”, according to the data report from the Ministry of Finance.

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74% of the gross debt in a normal payment situation corresponds to National Treasury Titles and Bills, 21% to obligations with Official External Creditors, 4% corresponds to Temporary Advances from the BCRA and the remaining 1% to other instruments.

An analysis by the Congressional Budget Office (OPC) detected that in December two cash tenders were held that resulted in the placement of government bonds in national currency Bonte, Lecer, Ledes and Lelites and bonds denominated in dollars payable in pesos Bonte dollar linked – for a total cash value (EV) of $1.17 trillion.

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“The exclusive second rounds for participants of the Market Makers Program (PCM) totaled subscriptions for EV $62,609 million, equivalent to 7.3% of the amount of eligible titles placed in the first rounds. In the December 14 tender, a new instrument (T3V3D) was offered exclusively for importers. It is a USD linked bond that does not pay interest and amortizes in three installments, on February 28, March 31 and April 28, 2023,” detailed the report by Mariano Ortiz Villafañe.

The study highlights that “in December the Government received loan disbursements for USD 7,296 million and paid amortizations for USD 3,013 million.”

In December the Government received loan disbursements for USD 7,296 million and paid amortizations for USD 3,013 million

It should be remembered that at the end of December the IMF Executive Board approved the third review of the Extended Facilities program signed in March 2022, which verified compliance with the goals agreed for the third quarter of the year, thus enabling the fourth disbursement of the agreement for USD 5,991 million (SDR 4,500 million), while amortizations for USD 2,682 million (SDR 2,014 million) were paid to the organization corresponding to the Stand-By loan (SBA) of 2018. In this way, the net financing of the Fund in the month was USD 3,309 million.

The OPC also details “USD 160 million in capital was paid to the member countries of the Paris Club. This is the first payment made after the restructuring agreed at the end of October 2022, for a debt valued at approximately USD 1,971 million as of September 30. The new payment schedule provides for the payment of the balance owed in 13 semi-annual disbursements, with the last scheduled for September 2028, and increasing interest coupons (the interest rate goes from 3.9% to 4.5% in October 2023 and 5.2% in April 2027)”.

In addition, the OPC identified the inflow of loans for USD 311 million from the China Development Bank (CDBC) for the acquisition of equipment and works on the Belgrano Cargas railway (USD 23 million) and for the construction project of the hydroelectric facilities of the Santa Cruz River (Cepernic and Kirchner Dams) (USD 288 million)”.

On the other hand, during December loans were approved from the IDB for a total of USD 900 million and a line of credit for USD1,140 million, from the EIB for EUR160 million and from CABEI for USD 50 million.

At the end of December 2022, the Treasury placed a Non-transferable Letter to the BCRA for USD 982 million, maturing in 2032 and accruing semi-annual interest at the rate of return of international reserves. These titles were issued within the framework of DNU 787/2022, which established a transitory mechanism for soybean exporters to settle foreign currency at a differential exchange rate of $230 per dollar.

The regulation reestablished the soybean liquidation incentive program implemented in September through DNU 576/2022, on that occasion with a differential exchange rate of $200 per dollar.

“As it happened under the previous program, the Treasury delivered the Non-transferable Bill to compensate the BCRA for the difference between the differential and the official exchange rate. On the other hand, a Non-transferable Bill was also placed to the BCRA for a ten-year term for USD 35 million, to refinance the interest coupon of another similar bill held by said body”, the private report of yore specified.

If the gross debt of the Central Administration of USD 396,539 million reported by the Ministry of Finance is subtracted from the debt contracted with the BCRA through Temporary Advances, because they are offset by an increase in the assets of a State agency, and Add to that the contracted by the entity chaired by Miguel Pesce with the monetary regulation instruments, accumulated to December 2022 the equivalent of USD 55,312 million, reaching a total consolidated net amount of USD 436,082 million. It rose by USD 49,635 million throughout the year, at an average daily rate of 136 million dollars.

In the almost 37 months of the presidency of Alberto Fernández, the public debt of the Central Administration, plus that contracted by the BCRA, rose by USD 114,843 million

In the almost 37 months of the presidency of Alberto Fernández, the public debt of the Central Administration, plus that contracted by the BCRA, net of Temporary Advances, rose by USD 114,843 million, at a rate of USD 106 million per day.

The analysis of the Congressional Budget Office highlights that at the end of December, the Supreme Court of Justice issued a precautionary measure that increases the automatic transfers of co-participating resources to the Autonomous City of Buenos Aires. CABA must receive 2.95% of the mass of co-participating resources, higher than the 1.4% prior to the resolution. Within this framework, the national government ordered that initially the payment be made through the delivery of Treasury bonds adjustable by CER TX31″

Thus, the analysis of the OPC details “DA 1282/2022 published on December 27 ordered the issuance of TX31 for $98,500 million, an amount that is equivalent to the difference between 2.95% and 1.4% of the co-participation for a period of 90 days. These bonds are in a Banco Nación account, to be made available to the CABA on a daily basis”.

On the other hand, the exhaustive OPC report directed by the economist Mariano Ortiz Villafañe adds that on January 4 an exchange was offered to holders of public securities maturing in the first quarter of 2023, for new securities maturing between April and February 2024. As a result, 67% of the eligible titles were exchanged.”

The NGO estimated that debt maturities for January total the equivalent of USD 13,957 million. “The payment of interest on foreign currency bonds for USD 1,022 million and the amortization to the IMF for USD 1,953 million, approximately, stand out.”

For 2023, payments of USD 118,734 million are estimated, of which correspond to maturities of public securities in national currency for the equivalent of USD 70,373 million.

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