– Does the UBA approve the debt swap with ANSeS?
– The UBA was not asked for an overall approval, it did not express a favorable opinion. The UBA is entrusted with an exercise on the interchange between the Treasury and public bodies, within which the FGS (Sustainability Guarantee Fund) of ANSES has a leading role. From the questions of the Ministry of the Economy emerge assumptions and methods of accounting for the valorisation of the security, which is given to you and generates an exclusively accounting profit.
– Does it have an impact on retirements?
– This exercise has nothing to do with retirement assets, in no way should it be interpreted as a gain for pensioners. The FGS, after more than 15 years, has never been used to address gaps in pension funding. Therefore, the exchange transaction between the Treasury and ANSES has no direct impact on equity. FGS does not pay pensions. They are paid with contributions, contributions and taxes.
– What are the risks of the measure?
– What is less talked about is a second operation, which is the sale of Bonares, public securities governed by national law which must be sold on the market and with what is collected, double Treasury bills can be subscribed for. When the FGS sells government bonds on the market, it acts as a dollar government debt issue.
– And what implications does this decision have?
– Not only are you generating an increase in public debt in dollars, the surprising thing is that you sell bonds to the private sector at very low prices and the counterpart of which is to validate high yields in foreign currencies. You’re borrowing at a very high rate, which depends on the bond you depend on between a 25% and 45% dollar rate, it’s historically very high.
– Is that a risk?
– The FGS removes a security at market value with very low par values and, on the other hand, records it at technical value, which is why the accounting profit is inflated. A comprehensive analysis must have a prospective outline of sustainability, a point that has not been requested by the Ministry of Economy. The point is not in the exchange, but in the release of debt from the FGS to the market. It is made up of government bonds, which is basically the guarantor of pensions, so the operation has a neutral effect. The FGS has never had the counter-cyclical role that was established in the DNU of its creation.
– Is it a problem that ANSeS fills up with Treasury securities in pesos?
– We should discuss whether these funds should not contain public assets because it is a state entity with debt securities against itself, and we should see whether Treasury securities would have the ability to counter fluctuations or to mediate before the negative evolution of variables economic and social.
– What would happen if interest rates rose?
– Since the interest rate is higher, future cash flows are discounted more and the accounting profit is reduced. By changing the way bonds are recorded, accounting profit is inflated. In this case, the FGS wins at the expense of the State itself. Now, the favorable valuation is obtained at the cost of lengthening the average life of the agency’s assets (receiving bonds in pesos by 2036), with which the increase in rates internationally can negatively affect the bond yield.
– In conclusion, what should be considered in the future?
– Highlight the effect of an increase in debt that will end up in private hands of the FGS. An increase in the public sector’s public debt in foreign currency at prices well below parity is being validated and, therefore, the state is borrowing at very high rates.
Source: Clarin
