Massa announces a ceiling on public spending and a debt “super swap” to defer payments

Besieged by devaluation pressures and difficulties in containing inflation, the government will seek this Tuesday to advance its plan to reduce the public accounts deficit and be financed only through the placement of bonds. Sergio Massa will receive the ministers of each area to set spending limits and ceilings for staff entering the public administration, while the Finance Secretariat will launch a “super exchange” of debt in pesos.

The goal is to meet the IMF’s agreed target of a primary deficit of 2.5% in 2022, at a time when private analysts estimate a red greater than 3.1% driven by an acceleration in spending, higher than the collection rate. The idea of ​​the Minister of Economy is to save about $ 500,000 million by removing tariff subsidies of energy and at the same time keep unchanged the budget approved by decree by Martín Guzmán in June.

According to data from the Congressional Budget Office (OPC), this scheme resulted in a nominal increase in revenue from $ 7.8 trillion in 2021 to $ 12.3 trillion in 2022 and in expenses, from $ 9.5 trillion to $ 9.5 trillion, respectively. 14.8 trillion. But if the calculation is made in relation to GDP, the changes represent a drop in collection from 16.8 to 16.6% and expenditure from 20.5 to 20.1%. Massa tries to keep that criterion in a second half with greater fiscal and financial needs.

“Since it was not possible to approve the 2022 Budget Law, a DNU was approved in June, the idea is to stick to these spending assumptions, do not increase the budget of any ministry that exceeds what has been decided, The decree is not changed and the projections are kept as they were sent, there will be no increase in spending nor will it continue to be issued to finance it until the end of the year, “said an advisor to the minister.

Massa met this Monday with his Secretary of the Treasury, Raúl Rigo, and the head of ANSES, Fernando Raverta, to define the details of the bonus for retirees. The extraordinary benefit will be announced this Wednesday and its funding will come from the prepayment of income tax to 1,900 companies. The AFIP resolution prepared by the previous Mercedes owner Marcó del Pont would allow the collection of 200,000 million dollars.

The signal that the government is aiming to send is that expenses that require more money to finance them will not be authorized. With the same goal, The Treasury returned a transitional advance of $ 10,000 million to the Central Bank on Monday. The BCRA transferred $ 630,000 million until July, reaching 90% of the limit agreed with the IMF. Now Massa is committed to a “zero” emission, therefore debt will be the only source of funding.

In that sense, it will be crucial for stretch maturities totaling $ 2.4 trillion in August, September and October. The Treasury offers three dual bonds maturing between June and September 2023, linked to the maximum variation between inflation (+ 2%) or official devaluation, so the investor will receive the best result of the two hedging options in pesos.

The minister anticipated last week that he has already obtained a commitment from the 60% participation, a level that should come mainly from ANSES and public banks. The central bank has bought $ 1.2 trillion in CER securities since the start of the run in June and government agencies this Monday were made on behalf of the seven letters that Economy will accept in exchange for double titlesa sign that they will intervene in the exchange.

The great proof will be the participation of the private sector, mainly banks, with a 17% participation. Three subjects considered the offer to be “attractive”. For Luciano Garay Gómez, an analyst at EcoGo, the “incentives” are the hedge against inflation and a possible devaluation and the conditions of the bonds, which expire before the PASO. On the other hand, banks have in their favor that they are not accounted for as foreign currency assets, according to the ADCAP.