Devaluation and inflation directly affect public debt, which grows at the speed of depreciation of the peso and increase in prices.
As of December 31, 2023, the stock of public debt in pesos amounted to $83.67 billioncomposed of 46% of the titles U$S connected (adjusted based on the value of the official exchange rate), 44% of adjustable securities CER (inflation) and only 10% of the debt in pesos without adjustment, according to the Congressional Budget Office (OPC) Report
In turn, the estimated maturities payable in pesos for 2024 amount to $94.10 billioncomposed of CER-adjustable debt (55% of total), dual bonds (inflation/dollar) (32%), U$S linked bonds (8%) and unadjusted peso bonds (6%).
This way, far from liquefyingpeso devaluations such as the inflationary surge directly index the stock of peso debt through the capitalization of adjustments and interest.
For example, Compared to 2022, peso debt grew by $60.45 billion, primarily due to valuation adjustments and interest capitalization of $53.36 billion. And interest payments on bonds of $929,257 million and interest maturities on public sector bills of $158,151 million renewed upon maturity, according to the OPC Report.
While, In foreign currency the debt reached 264,968 million dollars and because of the devaluation, more pesos were needed to acquire dollars to meet the deadlines. The increase was $1,948 million, explained by net issuances of $1,489 million and valuation adjustments of $459 million.
For its part, a total of $7,585 million in interest was paid on foreign currency debts over the past year, impacting the BCRA’s reserves.
The principal payments were explained by interest on IMF loans for the equivalent of 3,014 million dollarsbonds issued in the restructuring process started in 2020 for the equivalent of 1,965 million dollars, other multilateral loans for 1,720 million dollars and non-transferable invoices to the BCRA for 576 million dollars renewed upon maturity.
One fact that the OPC Report highlights is that Non-transferable letters of the National Treasury that the Central Bank had in its assets as of December 31st amounted to 67,189 million dollarsto which we now add the 3.2 billion dollars provided by the Milei government.
Through these non-transferable letters, the National Treasury withdrew reserves from the BCRA to pay debt to international organizations and private creditors, deteriorating the assets of the Central Bank because these are securities that cannot be marketed and are usually issued with a fixed term of 10 years and which are renewed upon expiry. .
Source: Clarin
