The use of the Sustainability Guarantee Fund (FGS), managed by ANSeS, is at the center of controversy and financial tensions. It’s not the first time this has happened. But on this occasion, since it was a measure unrelated to the operations of the FGS, it was necessary to ratify a Decree of Necessity and Urgency (DNU) obliging it, together with the rest of the public bodies, to “proceed with the sale or auction of its shareholdings in domestic government bonds denominated and payable in US dollars”.
At the same time, they must “subscribe to national government bonds payable in pesos to be issued by the National Treasury … in an effective amount equal to 70% of the proceeds they receive from the sale transactions of their holdings in government bonds denominated and payable in US dollars “, according to DNU 164/2023 published in the Official Gazette.
This move was not included in the rules dictating its formation hence the controversies and the different interpretations given to this operation.
But there’s more. The DNU adds that “these exchange operations will not be covered by the provisions of article 65 of the law No. 24.156 on the financial administration and control systems of the national public sector, as amended”. This article 65 establishes that such exchange operations may be carried out «insofar as this implies a improvement of the amounts, terms and/or interest of the original transactions”. That is not allowed here Wouldn’t this be the case?
The FGS was created in July 2007. Then, in November 2008, with the nationalization of the AFJP, it received the huge funds managed by those entities valued, at the time, at the equivalent of 23,749 million US dollars.
The funds managed by the FGS – i “retiree money”- They constitute a support to the pension system which can be used, if necessary, to pay the adjustments of the pension assets or system debts (trials or convictions) and “should be invested in projects and instruments to promote development and the capital market” , according to the creation decree.
Among the productive projects it is financing, the completion of the atomic power plant stands out tuna II. There are also credits for the integrated road system (Sisvial), the housing plans of the Banco Hipotecario, the Procrear plans, hydroelectric and thermoelectric plantsand credits for retirees.
During the first years after the operation of the FGS, the deficits of the ANSeS had been covered by the national treasury. But in 2018, former minister Nicolás Dujovne admitted that they were using part of the FGS funds to pay the current assets of retirees and retirees and taxes for pensioners who withdrew from trials, the so-called Historical Reparation.
In the meantime, each year, through a specific item, the national budget sets the maximum amount to be paid for final sentences.
The interest accrued on the suspended installments of the ANSeS credits was also forgiven and the debts that some provinces owed to the institution were refinanced.
On the other hand, for example, according to the Social Security, “during 2021 a third of the expenses (total ANSeS payments) were financed by the tax authorities”.
Now with the forced weighting of a portion of the assets in dollars (U$S 13,000 million at nominal value and approximately U$S 4,000 million at market price) of FGS, the main focus is obtain funding for the National Treasury, given the drop in funding, and intervene on the price of alternative dollars. Is that with the sale of a portion of the bonds in dollars, the FGS must subscribe 70% in National Treasury bonds in pesos (dual bonds).
It would be the first time that FGS would intervene explicitly for operations of this nature and for this reason the provision provided for a DNU (Decree of Necessity and Urgency), in the absence of a provision authorizing it.
The FGS is made up of financial assets such as public securities, shares in joint-stock companies, futures, negotiable bonds, mutual funds, financial trusts, mortgage bonds, loans to provinces and beneficiaries of the Pension System.
At the end of the second quarter of 2022, the value of the FGS Investment Portfolio is equal to $6.11 trillion, equivalent to a dollar valuation of $48,770 million. National Public Securities represent 73% of the total.
The FGS came to a valuation of US$64,055 million at the end of 2017. It shrank in the following two years to US$39,866 million due to the soaring dollar and also because the funds were used to pay the so-called Historical Repairs and current assets. Then – since the beginning of 2020 – up to 48,770 million dollars were recovered at the end of June 2022.
For its part, as reported by ANSeS, “at the end of January 2023, after an increase of 62% compared to the funds received at the end of 2019, the valuation of the FGS is over 56,434 million dollars”.
The top 5 shares of the FGS portfolio represented 59% of the total shares and corresponded to Ternium Argentina, Banco Macro, Grupo Financiero Galicia, Telecom Argentina and Pampa Energía SA
Source: Clarin
