02/12/2020 - 12:25
- Clarín.com
- Economy
- Economy
The Interblock of Together for Change presented a series of 24 questions for the Minister of Economy Martín Guzmán, which this Wednesday at 17 will be presented in the Chamber of Deputies in an information session on debt.
Here all the questions:
one.
What is your diagnosis regarding the reasons that explain the eventual "unsustainability" of the debt? Looking at objective indicators of liquidity and solvency of public debt (for example, debt to the private sector in% of GDP, interest on debt in% of GDP, duration of public debt, etc.) Argentina does not differ significantly from the rest of the countries of the region and emerging economies. However, it differs substantially in one respect: the country accumulates 10 years of economic stagnation and a primary deficit sustained over time that only declined in the last two years. This suggests, in our opinion, that the main causes to be attacked refer to the design of a stabilization and growth plan in combination with policies that manage to sustain the primary fiscal balance achieved with such effort in 2019.
two.
In this sense, do you consider that it is possible to successfully restructure public debt and achieve a qualified majority of acceptance of bondholders without first explaining a comprehensive economic plan that can be credible and reliable for creditors and for the Argentine people?
3.
Is there any successful international experience that you can refer to that has followed the opposite path that President Alberto Fernandez has defined as "playing poker" of debt without showing the cards ? Do not you think it would be less risky for the interests of the Argentine Republic to follow the guidelines of most successful sovereign debt restructuring processes ? These guidelines involve establishing an agreement with the IMF first (when there are previous debts) and launching an economic program capable of recreating trust.
Four.
Regarding the negotiation strategy, it is known that the votes of the so-called Collective Action Clauses (CAC) generate perverse incentives for voters. Sometimes, there are perverse incentives to reject the initial proposal and stay
outside waiting for a second offer surpassing. How are you thinking about breaking these perverse incentives?
5.
All sovereign debt restructuring faces governments facing the challenge of seeking a balance between the preservation of "reputation" and the search for "sustainability" of debt. Uruguay (2003) and Argentina (2005) can be seen as two extreme cases. The Uruguayan restructuring in 2003 - to cite a geographically close case - was an extreme example of reputation preservation. The Uruguayan government promoted a relatively friendly restructuring of the market and obtained low levels of cuts in present values - approximately 23% - and practically zero in nominal terms.
Although Uruguay managed to clear short-term liquidity problems, it came out of its restructuring with a debt stock greater than 100% of its gross product, which could challenge its solvency in the future. Uruguay's "friendly" strategy in 2003 ended up being a success (although not only attributable to that factor). In the balance "reputation versus sustainability", Argentina (2005) stood at the opposite end. Reputation costs were underestimated and the focus of the discussion was exclusively on the theoretical repayment capacity. What is your vision on this point? Attentive to the fact that this Congress will delegate to the National Executive Power and in your person the definition of this delicate balance.
6.
Regarding the IMF's role in negotiations with private creditors. In its opinion, should the IMF play any role in the negotiation with the bondholders and, if so, how would this work be carried out and how would it be implemented?
7.
The Argentine government plans to initiate negotiations for a new program with the Fund and what characteristics would it assume? Alternatively, how do you expect to face interest payments and capital repayments with the IMF, in particular the US $ 1.6 billion of interest payable quarterly due in 2020?
8.
What is the official position of your government regarding the recent statements of Vice President Fernández made from Havana, Cuba, about the need to claim a debt relief with the International Monetary Fund ? Knowing whether these statements complicate the relationship with the IMF member countries, which are the contributors of funds to that international organization.
9.
In an eventual agreement with the IMF, does the government intend to propose "structural reforms" to support public debt sustainability? What reforms do you believe should focus the growth agenda in Argentina?
10.
What majorities seek to achieve in restructuring ? Will they seek to obtain aggregate majorities or for each particular series?
eleven.
Are they under study providing "special guarantees" to bondholders?
12.
Is the issuance of coupons tied to GDP growth as they were offered in the 2005-2010 restructuring being evaluated? Do you consider it a useful instrument for the Republic and the chances of successful restructuring?
13.
What is the primary surplus path that the government poses forward and how do you plan to achieve it?
14.
Is the preparation and presentation to the National Congress of a multiannual budget as required by the Financial Administration Law?
fifteen.
Are there measures planned to reduce the level of National Public Expenditure ? Or will all the fiscal effort fall on the backs of retirees with incomes above the minimum?
16.
What is the path of expenses and tax pressure in% of the Product that you believe is consistent with sustained economic growth?
17.
When the 180-day period of the freezing of tariffs is fulfilled, will the tariffs have a period of normalization , will the subsidies increase again (to companies or consumers) or, for lack of investments, the incipient will be put at risk again power supply?
18.
Will there be equal treatment for all creditors in the offer? Will debt under national legislation be treated equally with respect to debt under foreign legislation?
19.
Will the FGS (ANSeS Sustainability Guarantee Fund) be treated differently in the restructuring? How will current and future retirements affect debt restructuring?
How do you plan to propose debt restructuring with foreign legislation in the hands of the ANSES FGS? Do you think that it can be restructured in a differentiated way or will a take away in present value also be considered for the FGS?
twenty.
Should restructured bonds in 2005 and 2010 be included as part of the exchange? What legal consequences could this decision have?
twenty-one.
Will the exchange that will be proposed have a certain closing date, or will there be a possibility that bondholders who do not enter at the beginning will be added later?
22
There is serious concern in the 79 Professional Pension Funds of the Argentine Republic (18 Provinces and CABA), with nearly 800,000 active members, and 80,000 beneficiaries - among retired pensioners - who have invested part of their pension funds in public titles today achieved by debt restructuring. As well as with respect to the investments made in said public debt instruments by the Sustainability Guarantee Fund. The Administrations of the Professional Banks have regulations that authorize them to make investments in public securities as a form of capital protection, that is, they are investments that try to maintain the purchasing value of the currency protected in said instruments. Therefore, a reduction of its capital would affect the fulfillment of future pensions and pensions of those who contribute to these systems.
In the same situation is the Sustainability Guarantee Fund, composed of bonds that could suffer a significant capital withdrawal in the restructuring. This puts the retirement of our senior citizens at risk . The debt restructuring generates a huge impact on the social security system, based on the holding of public securities held by the ANSeS and the provincial public and professional pension funds. What will be the debt restructuring treatment whose holders are the Provincial Public and Professional Pension Funds and Anses (Sustainability Guarantee Fund).
2. 3.
Do you plan to move forward in the regulation of art. 25 of the tax liability law to give certainty to the provinces about their indebtedness in the market and with international organizations?
24.
Can you give details on the alleged modification of the co-participation to the City of Buenos Aires and other measures of reversal of fiscal federalism, to re-concentrate the tax resources in the National Government as occurred from 2003 to 2015?