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At the cost of a sharp drop in reserves, in January there was a slight drop in the public debt in dollars


In dollars, it decreased by US$ 2,137 million. The debt in pesos increased by an equivalent amount in dollars of US$ 1,365 million.

In the midst of the controversy over the levels of indebtedness, the Secretary of Finance of the Ministry of Economy reported that, mainly due to the payments to the IMF in January, the national public debt in foreign currency decreased by US$ 2,137 million, but increased the debt in pesos for an equivalent amount in dollars of US$ 1,365 million.

Thus, last month the national public debt – without the Central Bank or Provinces – was reduced by US$ 772 million: from US$ 396,539 million to US$ 395,779 million.

34% of the debt in a situation of normal payment is contracted in local currency while the remaining 66% is in foreign currency.

Due to payments, and after the strong rise in December due to net disbursements (some US$ 4,000 million), the debt with the IMF – expressed in SDRs (Special Drawing Rights), the currency that the organization uses in its transactions - - went from U$S 45,707 million to U$S 43,475 million.

The other side was that the gross reserves of the Central Bank fell in January by US$ 3,181 million due to payments to the IMF plus the cancellations of other maturities of public titles in dollars.

The Finance report clarifies that "during the last 12 months, the stock of gross debt in a situation of normal payment increased by the equivalent of USD 30,061 million, due to the increase in foreign currency debt of USD 9,374 million and the increase in the debt in local currency for an amount equivalent to USD20,687 million”.

While with Mauricio Macri, the debt in foreign currency grew the most - in part due to the extraordinary loan from the IMF and the issuance of Bills in dollars -, during the administration of Alberto Fernández the debt in pesos went from the equivalent of US$ 63,408 million to US$ 132,546 million: an increase of 109%.

And the debt in pesos, from representing 20% ​​of the total at the end of Macri's term, is now 33.7%.

Based on these percentages, the Vice Minister of Economy stated that although Argentina should not borrow in pesos or dollars, "borrowing in dollars is riskier than borrowing in pesos."

However, although borrowing in foreign currency entails the danger of not counting the dollars to face both principal and interest maturities (as has been the case for years), the debt in pesos --- in a high proportion indexes for inflation or for the rise of the official dollar.

And there is the risk that the Treasury does not have the funds and must resort to the Central Bank (issuance) or take new loans indexed by rising inflation or a dollar that does not stop rising, as is currently happening.

Source: clarin

All business articles on 2023-02-16

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