Behind this move by the economic team to force the sector and especially the ANSeS to sell their holdings of dollar bonds in exchange for special securities in pesos there is the “ghost” of maxi-devaluation and/or hyperinflation.
Given the prospects that the Reservations Central Bank rates continue to decline compounded by drought, dollar debt depreciates even further, and domestic prices accelerate and spiral, the Government appeals to the reservations, among other bodies of ANSeS, to mitigate (although it may deepen) an outcome that increasingly presents itself as irreversible and inevitable.
This was made worse because the announcement has since been made carelessly the Decree of Necessity and Urgency has not been released (DNU), the fine print of the measure is unknown, which has given rise to dozens of interpretations and speculation. And they appear to be improvisations or measures “taken out of the hat”.
Only a few weeks ago Economía came out early redemption of dollar bonds with the aim of improving its price and opening a financing channel abroad. AnSeS also bought those securities in dollars which it is now forced to sell or exchange. That move, also made with carelessness and suspicions of favoritism, petered out.
Now, The economy tries a contrary measure, forcing the official holders to sell those dollar positions with the argument of driving down the price of alternative dollars, and the pesos raised by those organizations are used to buy peso bonds that help finance the fiscal deficit. It’s a kind of “Russian roulette”.
The role of the ANSeS Sustainability Guarantee Fund (FGS) It is not an auxiliary of the national treasury but to preserve “retiree money”. In this case, and without access to voluntary financing, the government forces public bodies to finance it by selling their holdings of dollar bonds at a high price for the Treasury and also for the sellers.
Is that, according to the ANSeS, in exchange for the sale or exchange of dollar bonds that the FGS (Sustainability Guarantee Fund) has, it would receive a special long-term dual bond at a 40% discount, in inflation-adjusted pesos ( CER) or peso devaluation (dollar-linked), both major, which represents a super extraordinary short-, medium-, and long-term fiscal cost to the Treasury, which feeds back inflation.
The peso bond would have an effective annual yield of 8%, plus the CER or exchange rate adjustment. In any case, it would suffer the blows of the exchange rate and/or skyrocketing inflation and the political crisis. .
The “final key” is held by the IMF with its audits and disbursements and his political decision to accompany or not the moves of the economic team and, ultimately, the electoral process until the assumption of a new government.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.