The debt in pesos It is at the center of the debate on the economic and political agenda, and it is already generating conflicts at the beginning of the electoral year. From the opposition they classify it as a “bomb” about to explode. On the other hand, from the ruling party they relativize this evolution and assure that it is “absolutely manageable and sustainable.” And, facing a campaign that has already begun, the debt and the financial situation are part of a key chapter in the debate for the 2023 inheritance.
According to the Vice Minister of Economy, Gabriel Rubinstein, the debt in pesos represents 24% of GDP (taking short and long term instruments). He commented so on his Twitter account, and maintained that “half of that debt is in the hands of the National State itself.
According to data from the Congressional Budget Office, the country in 2023 faces maturities for a total of US$80.900 million, contemplating all kinds of instruments and considering a conversion at the official exchange rate. Of this amount, 68% corresponds to instruments payable in pesos, a set that also includes the debt that is adjusted by CER (21%), bonds dollar linked (4%), dual bonds that are variably adjusted according to the evolution of the exchange rate and inflation (22%) and those issued in pesos without adjustment (21%).
The short-term horizon of accumulated maturities, as a result of the bidding and deficit financing strategy implemented by the Ministry of Economyconcentrates most of it in the months prior to the STEP. Passed the first test of the year in January, with a rollover of 148%, between February and March the Government will face monthly maturities for some $600,000 million. For the Ecolatina consultancy, these are amounts to be transferred without major turbulence, as long as “stress episodes” do not appear. But the scenario becomes more complex from April.
Between the second and third quarters of the year, the monthly average of maturities is around $2 trillion. Faced with the high maturities and the impossibility of the Central Bank to participate in the primary tenders, from the economic consultancy they anticipate that the Treasury will once again promote exchange operations throughout the year, Probably from March.
“It will be essential for the Government to continue undergoing a process of fiscal consolidation that allows to keep the financing needs limited. However, the rollover will not only depend on what the government says or does, but also The signals given by the opposition regarding the treatment of sovereign debt in the face of a possible change of management will be key”, they highlighted.
For the ruling party, the great challenge that lies ahead is to extend the maturities beyond September 2023. But uncertainty is growing in the market linked to the political uncertainty about what the government or a possible new administration will do with that debt. The reprofiling episode, after the PASO of 2019 and the recent crossings from both paths feed this lack of certainty that increases the financial tension in 2023.
“You have to refinance 10% of GDP this year. It is quite a lot, but you should be able to do it in a normal situation: in a year without elections, without a change of government, it is totally refinancing,” he said. Guido Lorenzo, economist and director of LCG. “It is a problem more due to the distrust of the willingness to pay more than capacity. The Government cannot pass due dates in September, because there is a lot of distrust of what this government and the next government can do”, he added.
According to Gabriel Caamanodirector of Consulting Ledesma, the scenario presents “misaligned political incentives” that cloud the short-term horizon. “The problem, for now, is with this government in the short term. Although it is true that there is debt that was kicked off for 2024, 2025 or 2026, what worries the most is the number of maturities that accumulated before the STEP. And among them is the dual bond, which is largely held by the BCRA and the public sector,” said the economist.
“The government is concerned rollear its debt and that, in an ideal scenario, would be to have a context of cooperation in the transition between the ruling party and the opposition, which today does not seem possible. The incentives are misaligned. The opposition has incentives to present the problems and for the costs to begin to be paid by the current government, in the middle of an election year, something that perhaps is not the best for the country. They are going to try to show the cost of the inheritance, ”she completed.
Beyond the debt, from Together for Change insisted that “the inheritance” that the next government administration will receive “will be much worse than that received in 2015”, when Mauricio Macri assumed the Presidency. At that point, they pointed to other macroeconomic variables, such as inflation and the exchange rate gap.
The scenarios are different. Since we go, in the In recent years, the evolution of total gross debt has also increased. According to official data from the National Ministry of Finance, in 2015 the figure was US$240,665 million (52.6% of GDP). At the end of 2019 it was US$323,065 (89.8% of GDP) and in the third quarter of 2022, the latest data available, it amounted to US$382,281 million (79.8% of GDP).
Eight years ago, the gaze was on the external front. The net reserves of the Central Bank were in negative territory and the country lacked access to the international financial market, with the lawsuit opened by the holdouts (Vulture funds). The “advantage”, the economists considered, is that the debt was low. But, for that, the Government advanced with the elimination of restrictions and the exchange rate, one of the first measures that Macri took after taking office on December 10 of that year.
The main economic variables complete the picture of this comparison. In 2015, the exchange gap was around 51% (the official dollar was trading at $9.75 and the blue, at $14.77). Today, with a parallel exchange rate at $377 and a retail rate at $196.25, is 91%. For Caamaño, this gap that almost doubles that of 2015 accounts for the delay that exists in official values, beyond the historical evolution of the exchange rate and its average value.
“Now it is more difficult to devalue than in 2015, because Argentina is in a high inflation regime. So, adjusting the exchange rate is much more dangerous,” he compared Claudio Caprarulo, director of Analytica, referring to the impact of a movement in the dollar on prices. “At the same time, there is no access to credit markets in the short term and, on the contrary, there is a very large debt commitment in foreign currency,” he added.
In 2015, year-on-year inflation closed at 26.9%, according to data from the CPI of the City of Buenos Aires (Indec was intervened and its figures were manipulated). Instead, by 2023 economists project that prices will increase by 97.6%, according to the latest Survey of Market Expectations (REM) of the Central Bank. The data comes after the cost of living rose 94.8% year-on-year in 2022, the highest figure since the end of hyperinflation in 1990.
For Caamaño, the inflationary process is much more accelerated. And taking into account that the parity agreements were shortened over time and feed back the upward trend, it will be much more difficult for the next government to curb the current price dynamics.