Concerned about rebuilding reserves and easing dollar uncertainty in the face of tensions that led blue to close at $400 on Friday, the government prepares to resume bond trading suspended for a month. To activate this operation, it was necessary for the UBA to disclose the opinion that Sergio Massa requested after the turmoil that the financial operation generated. What does that report say?
The Faculty of Economic Sciences approved the opinion and indicated that the operation proposed by the Minister of Economy has “a neutral effect” and do not imply “a loss of property” for public bodies.
“At the request of Economy Minister Sergio Tomás Massa, we proceed to answer the questions raised regarding the public stock market operation involving a group of national public sector organisations”, reads the opening of the opinion. . And he adds: “These refer exclusively to the impact that this exchange could generate in the heritage accountant of the institutions involved”.
Then he warns: “The answer contained in this document is given on the basis of information provided by the Ministry itself and must not be considered in any way as an economic policy judgment or an analysis of the complete and potential impact of the evaluation itself developed, nor of the macroeconomic and financial implications of the initiative in question”.
Point by point, what were the responses of the Faculty of Economics of the University of Buenos Aires to the request of the Minister of Economy:
- The answers contained in the report focus their analysis on the Sustainability Guarantee Fund (FGS) administered by the National Social Security Administration (ANSeS), given that this represents the majority of equity investments subject to transfers and/or operations or exchanges.
- The FGS constitutes a stock that should not be confused with the flow corresponding to the periodic payment of the goods carried out by ANSeS, therefore the operations analyzed do not correspond no direct impact on assets to be received by beneficiaries of the pension institution.
- Indeedthe FGS has never been used to address funding gaps of the public pension system or to preserve the amount of benefits paid by ANSeS.
- The report concludes that both the sale in exchange of public securities would not lead to a capital loss for public organizations reached. On the contrary, both transactions involve capital revaluations at the time they are carried out.
- In the case of the sale of securities under Argentine law (Bonars), the the capital gain is close to +46% product of the sale and subsequent subscription of the 2036 dual bond for 70% of the proceeds. Complementarily, heOrganizations receive the remaining 30% in cash.
- The global bond swap implies an average appreciation of public sector portfolios of around +104% on average. Although this appreciation is reduced if we consider the potential market prices of the securities to be traded, the result continues to be positive for the organizations reached by this measure (+23.4%).
- Exchange transactions have a neutral effect on the overall indebtedness of the consolidated public sector as they only involve a change in equity within the entities that make it up.
How was the selection mechanism of the authorities for the drafting of the technical report
The Faculty of Economic Sciences of the UBA has released its opinion on the technical report by Minister Sergio Massa to start the conversion of the debt into dollars of the national public sector.
In turn, it was spread as the mechanism for designating decision-making authorities: “once the application for study has been received, it is transferred to the technical assistance sector of the Faculty, which carries out this type of work for both the public and private sectors”, explained the Professional Council of Economics.
In this sense, they also specified that “subsequently those who have an influence on the given topic are consulted, the responsibilities of the matter, and propose to the board of directorswhich is the governing body of the faculty, for their approval of who they think should do it.
The full professor of Economic Development at the Faculty of Economics of UBA, Andrés Lopez, as a member of the council, was the one who proposed Julián Leone and Daniel Milia as coordinators of the response to the ministry.
The proposal was voted unanimously by the board of directors.
NS
Source: Clarin
