Argentina 2022 - 2032

[Redpossum]

Here's a stab at it.

ANSES holds the state pension fund. ANSES needs to borrow money to pay the pensions today and tomorrow for which it collected contributions yesterday. To borrow money it issues bonds that to date have been both in USD and ARS. The government is now ordering ANSES (and other public entities) to change the USD public bonds they hold (which people are willing to pay a higher price for) into ARS bonds (which people are not willing to pay a higher price for but may prefer if cheap enough) and turn them over to the private market and thus (or hopefully, according to Massa's gamble) bring down the price of the USD bonds already in the market. These bonds are the CCL and MEP FX rates, meaning less demand for these bonds and less traded publicly, the lower the price of the CCL and MEP "dollars" and the government stands to "save" about $3,7bn in doing so over the next weeks/ months.

The risk however is that the market traditionally doesn't have much appetite for ARS bonds and the minute sh!t hits the fan they end up in the sewer, meaning when it comes time to pay all those pensions ANSES may run into serious troubles being able to raise the funds it needs. Especially if tax collection is down due to crisis/drought/capital flight and whatever else is going on at the time and unable to borrow from international creditors.

To see how bad it is for pensioners already consider that in 2015 the minimum pension was US$277, in 2017 it was US$364 and now in 2022 it is US$150, putting Argentina second lowest in Latin America next to Venezuela which is currently at US$6. With this in mind, pensions are already dangerously on the brink of passing the point of no return.

Why is Massa's government doing this? Because they need to service an upcoming $4bn debt obligation and with a brecha of 100% and insufficient reserves the only options they have are a) cut spending b) devalue the official FX rate c) borrow money from international creditors or d) slow the day-to-day outflow of USD or e) default.

Why is option D so problematic? Because it incurs a major mid-long-term risk for the pension fund simply to gain a few short months of "breathing space" before coming back to face the same obligations with the same problems in a few short months.

That was a great explanation, thank you. The upcoming $4bn debt obligation you refer to in your penultimate paragraph, is that a payment to the IMF?

In any case, I strongly disapprove of screwing over the seniors. That is always the IMF's first thing to push for, cutting pensions, and this is one of the reasons why I despise the IMF so very strongly.

 

[Agribotics]

In any case, I strongly disapprove of screwing over the seniors. That is always the IMF's first thing to push for, cutting pensions, and this is one of the reasons why I despise the IMF so very strongly.

Argentina doesn't have to accept IMF loans. Or if it does it can find some other way to make good on its loans.

 

[sts7049]

option A should be on the table first and foremost

 

[antipodean]

That was a great explanation, thank you. The upcoming $4bn debt obligation you refer to in your penultimate paragraph, is that a payment to the IMF?

In any case, I strongly disapprove of screwing over the seniors. That is always the IMF's first thing to push for, cutting pensions, and this is one of the reasons why I despise the IMF so very strongly.

IMF isn’t Argentinas only foreign creditor.

 

[Brian_is_here]

option A should be on the table first and foremost

I mean… here’s a crazy thought.. how much of the gdp is lost to corruption or non compliance?

Decreasing spending, efficiency, and revenues are what Argentina needs but will never see.

 

[Reply Guy]

This washout is needed for the great Argentina bull run of 2025 to 2032

Until then...

 

[gracielle]

23 March 2023

El FMI, cauteloso sobre el canje de bonos: pidió "no aumentar las vulnerabilidades en el futuro"

La portavoz del organismo aseguró que en breve se concretará la reunión del directorio ejecutivo sobre el desembolso esperado de u$s5.300 millones

www-iprofesional-com.translate.goog

The spokeswoman of the International Monetary Fund (IMF), Julie Kozack, assured that "shortly" a meeting of the Executive Board of the organization will be held to analyze the recent bond swap measures ordered by the Argentine Gov't and to decide on the disbursement of US$ 5.3 billion agreed in the last technical review....However, the economist did not give details about the date of the meeting. "We expect it to take place very soon," she said without further details. "There is usually a period of time between when we reach an agreement at the staff level and then go to the Board, so we expect the meeting to take place relatively soon and according to the regular quarterly cycle of reviews,"....
Debt bonds to be exchanged....

 

[gracielle]

Automatic Google Translation of entire article:
23 March 2023

Canje de bonos para organismos públicos: qué dicen los dos decretos

Los textos llevan la firma de Alberto Fernández y de todos los ministros de Gabinete. Fueron oficializados este jueves

www-cronista-com.translate.goog

Official bulletin. Exchange of bonds: what the two decrees say. The texts bear the signature of Alberto Fernández and all the Cabinet ministers. They were made official this Thursday....

....With these two decrees, the package of measures that Massa anticipated to the bankers and insurance companies at the meeting yesterday Wednesday was activated....The combo seeks to concentrate the management of dollar bonds in the hands of the public sector and obliges public bodies to divest themselves of this type of holdings, both those with foreign legislation (global) and with local legislation (AL). It is estimated that there are more than 100 state agencies, led by the BCRA and the FGS of ANSES, which have a stock of dollar-denominated bonds for a face value of US$35 billion.

Control the dollar and finance the public sector. The measure also seeks to obtain funds to finance the deficit, in a context in which the drought hits full income through Export Duties. 30% of the sale of the bonds may be applied to the objectives, goals and activities of each organization in the course of the 2023 budget year , including the financing of productive investments and credits that drive internal consumption. As indicated by Massa's team, the Treasury expects to obtain around $2 billion in this way in the next 120 days.

 

[sts7049]

Deuda pública: en 39 meses de gobierno aumentó en 4 veces el monto que acordó con el FMI

Surge de la diferencia entre vencimientos, emisiones y canjes y cancelaciones de títulos y acuerdos de créditos con organismos locales e internacionales, más la colocación neta mensual de Leliq y Pases del BCRA equivalente en dólares

www.infobae.com

Such a growth in the Central Administration's debt from December 2019 to February 2023 inclusive is explained by the inability of the national government to generate the primary fiscal surplus, and even more financial -after interest service payment-, which has led to a excessive dependence on assistance from the Central Bank, which is defined as "transitory", but which in practice has become permanent, since more than 40% (USD 5,732 million as of last February) has a 10-year Non-transferable Bill as counterpart term, and the balance equivalent to USD 8,436 million is automatically renewed at the beginning of each year, after accounting cancellation at the end of the previous year.

This resource that is used to finance excess public spending is not free, neither for the Treasury, nor much less for society as a whole, because in order not to generate monetary effects, they are quickly absorbed through the regulation instruments of the liquidity on the part of the Central Bank -Leliq and repos operations- that not only feed inflationary expectations and reality, but also the debt of the monetary entity with the financial system as a whole.

 

[antipodean]

Deuda pública: en 39 meses de gobierno aumentó en 4 veces el monto que acordó con el FMI

Surge de la diferencia entre vencimientos, emisiones y canjes y cancelaciones de títulos y acuerdos de créditos con organismos locales e internacionales, más la colocación neta mensual de Leliq y Pases del BCRA equivalente en dólares

www.infobae.com

Wait, what, borrowing from parties other than the hegemonic IMF isn’t free?

Then how much is the government (or the next) going to pay to borrow enough to cover all those state owned entities first quarter losses today?
- IEASA US$1,9bn
- Trenes Argentinas US$621m
- Aerolineas Argentinas US$261m
- AYSA US$243m
- Correos US$114m
- Radio y TV Pública US$58m
Etc etc etc