Public debt issues made by the National Treasury totaled $4.8 trillion throughout 2021, according to a report by the Congressional Budget Office (OPC). This amount implies that last year the Government placed debt at an average of $13,150 million daily.
In addition to the 33 auctions of public debt carried out in the year by the Ministry of Finance, 24% of that indebtedness was covered with the monetary issue of the Central Bank through Temporary Advances.
Throughout the year, gross debt issues were registered for the equivalent of USD 95,488 million, and capital cancellations for the equivalent of USD 71,453 million (OPC)
Most of that $4.8 trillion was used to pay off other maturities. “Throughout the year, gross debt issues (securities placements, loan disbursements, capitalizations) were recorded for the equivalent of USD 95,488 million, and capital cancellations (amortizations and other write-downs of securities) for the equivalent of USD 71,453 million. ,” pointed out the report.
The average term for placing public securities was 323 days, with variations depending on the type of bond: the longest term was achieved in those tied to the dollar, or dollar linked, and it was 491 days. The spread was reduced in CER-adjustable -inflation- (479 days), variable rate securities (185 days) and fixed rate securities (126 days).
Of that amount, $4.27 trillion were subscriptions in local currency, with a predominance of titles adjusted for inflation. There were also tenders for $529,000 million “in kind”, in which the subscribed bonds were exchanged for others.
But this barrage of debt issues was not enough to meet the Treasury’s commitments and there was also a contribution from the Central Bank. “In the accumulated of 2021, net financing through Temporary Advances totaled $912,599 million (equivalent to 2% of GDP), while the net issuance of Treasury Bills signed by the BCRA totaled USD 4,138 million (0.9% of GDP ). On the other hand, the BCRA transferred $787,712 million to the Treasury as profits (1.7% of GDP)”, highlighted the OPC.
The Minister of Economy foresaw that 60% of the accounts in red would be covered with the issue and the remaining 40% with financing in the market. But he couldn’t make it
Among the three sources, Central Bank financial assistance reached 4.6% of GDP estimated for 2021. In the case of the distribution of profits, they do not represent an indebtedness for the Treasury, although in reality it is an accounting device: the BCRA gives the Government the yield in pesos of its reserves in dollars, produced by the effect of the devaluation .
To cancel its commitments, the Government used the equivalent of USD 37,508 million through the issuance of public securities in the market, USD 13,446 million through Temporary Advances, USD 9,625 million in BCRA Letters, USD 3,737 million in the Stand loan -By the IMF, USD 2,485 million to loans from other multilateral and bilateral organizations, and USD 4,652 million to other debt instruments.
The Treasury disbursed interest for an amount equivalent to USD 6,103 million, of which 36% was made in foreign currency. Interest payments to multilateral organizations totaled USD 1,969 million, of which 68% (USD 1,347 million) corresponded to the IMF Stand-By loan
Far from the 2021 Budget guideline
The analysis carried out by the Congressional Budget Office is useful to evaluate one of the objectives set by the Minister of Economy, Martin Guzman, in the 2021 Budget. There, a parameter was set to finance the fiscal deficit: Guzmán foresaw that 60% of the accounts in red would be covered with the issuance of 60% and the remaining 40% with financing in the market. But he couldn’t fulfill it.
“Monetary assistance represented more than $2 trillion (4.7% of GDP without discounting the repayment of transitory advances with the sale of SDRs) and net indebtedness was $746,000 million (1.6% of GDP). Thus, the proportion between both sources was 74% and 26%, respectively (70%-30% if the repayment of transitory advances is contemplated) ”, explained a report by the Equilibra consultancy.
In this way, Guzmán needed the Central Bank to issue many pesos that investors did not want to give him in the market. That net indebtedness or new debt generated last year for $746,000 million was 90% tied to inflation due to the expectation that the rise in consumer prices will remain high in the coming years.
“On the contrary, because the BCRA did not move its interest rates throughout 2021, variable-rate debt became less attractive and, in net terms, the Treasury reduced this type of indebtedness by more than $350 billion,” he concluded. Balance.