Sharp increase in the payment of interest on public debt

Interest on public debt continues to rise the deterioration of public finances and the low reserves of the Central Bank.

After payment in pesos and foreign currency for the equivalent of $7,629 million in 2022, in the first three months of this year interest was paid in the amount of US$ 2,950 million, according to data from the Congressional Budget Office (OPC).

In relation to the first quarter of 2022, debt interest expense ($695,678 million) recorded an increase of 22.0% yoy in real terms (above inflation), which is explained by higher interest payments on IMF loans and foreign currency securities issued as part of the September 2020 debt restructuring process.

“These securities have a step-up coupon structure and the average coupon for the period was nearly 60 basis points higher than the payout for the same quarter a year earlier,” the report said.

For its part, during the first quarter of this year, interest and amortization were paid to the IMF in the amount of USD 6,060 million, corresponding to the SBA loan (US$5,761 million) and the EFF (US$299 million interest), while a single disbursement was received for US$5,381 million”.

The OPC Reports show that:

• during 2020 interest payments have reached an equivalent amountand to US$8,043 million, of which 46% made in foreign currency. Interest payments to multilateral organizations, amounted to US$ 1,994 million, of which 65% (US$ 1,306 million) corresponded to the IMF Stand By loan.
• • During 2021 interest cancellations amounted to an amount equal to US$6,103 million, of which 36% carried out in foreign currency. Interest payments to multilateral organizations amount to US$1,969 million, of which 68% (US$1,347 million) corresponds to the IMF stand-by loan.
• during 2022 the interest payment has reached an equivalent amount at $7,629 million, of which 53% made in foreign currency. Payments to multilateral organizations amount to US$2,545m, of which 68% (US$1,721m) is IMF loans.
• In January 2023 interest has been canceled for the equivalent at 1,463 million dollars, of which 77% in foreign currency. The interest payments on securities issued in the 2020 debt restructuring process in foreign currency for the equivalent of US$ 1,022 million stand out.
• In February interest has been canceled for the equivalent of 961 million dollars, of which 79% in foreign currency. Interest payments to the International Monetary Fund (IMF) of US$ 695 million were disclosed, corresponding to the 2018 Stand-By Loan (SBA) and the 2022 Extended Fund Facility (EFF) programme.
• In March interest has been canceled for the equivalent of 526 million dollars, of which 59% in foreign currency. The interest payments on loans from international organizations of US$ 228 million stand out.
• After record cancellation of US$19,442 million in public debt interest in 2019with the previous Government, between January 2020 and March 2023 with the current Government, disbursements also for interest amounted to US$ 24,725 million, despite the restructuring and conversion of the debt.
• The interest account with the IMF is estimated to exceed $2,700 million this year versus $1,721 million in 2022.