Amid the controversy over debt levels, the Ministry of Economy’s Finance Secretary reported that, mainly due to payments to the IMF in January, national foreign-currency public debt fell by $2,137 billion, but increased the debt in pesos for an equivalent value in dollars of US$ 1,365 million.
Thus, last month the national public debt – without the Central Bank and the Provinces – decreased by 772 million dollars: from 396,539 million dollars to 395,779 million dollars. 34% of the debt in the normal payment situation is contracted in local currency while the remaining 66% is in foreign currency.
As a result of the payments, and after the strong growth in December due to net disbursements (approximately US$ 4,000 million), the debt to 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 flip side was that the central bank’s gross reserves decreased in January by US$3,181 million due to payments to the IMF plus write-offs of other maturities of dollar government bonds.
The Financial report clarifies that “over the past 12 months, the stock of gross debt in normal payments increased by the equivalent of $30,061 million, due to an increase in foreign currency debt of $9,374 million and an increase in the debt in local currency for an amount equal to USD 20,687 million”.
While under Mauricio Macri the currency debt grew the most – in part due to the extraordinary IMF loan and the issuance of dollar bills – during the Alberto Fernández administration the debt in pesos rose from the equivalent of US$ 63,408 million to US$132,546 million: a 109% increase. And the debt in pesos, to represent 20% of the total at the end of Macri’s mandate, is now 33.7%.
Based on these percentages, the Deputy Economy Minister said that although Argentina should not borrow in pesos or dollars, “borrowing in dollars is riskier than borrowing in pesos.”
However, although foreign currency borrowing carries the danger of not counting dollars to meet principal and interest payments (as has been the case for years), debt in pesos — in a high proportion indices for inflation or for the rise of the official dollar. And there is the risk that the Treasury does not have the funds and will have to resort to the Central Bank (issue) or take out new loans indexed to rising inflation or to a dollar that won’t stop rising, as is currently happening.
Source: Clarin
