The government authorized the issuance of $20 billion in Treasury bills to pay off the BCRA debt.

Economy Minister Luis Caputo. (Photo: Gustavo Gavotti)

This Wednesday the government officially announced the creation Liquidity Fiscal Tax (LeFi) Letterthe instrument by which they seek to transfer the debt central bank For him Treasure and turn off one of the “taps” of money emission, which in this case is the interest that the organization pays on its remunerated obligations. According to official data, the entire operation will take “another couple of weeks.” Information.

This measure was known thanks to Decree 602/2024 belonging Executive powerpublished this afternoon in the supplement to Official Bulletinin which they authorize the issuance of new bills for a term of one year and a limit of 20 billion dollars at par value. The initiative was proposed at the end of June at a joint press conference of the Minister of Economy. Louis Caputoand the President of BCRA, Santiago Bausili.

The ultimate goal is for the monetary authorities to stop issuing pesos to pay interest on the debt it owes to the banks, and these costs begin to be borne by the Treasury Palace. The government will thus have to make additional financial efforts.

Luis Caputo and Santiago Bausili. Photo: Gustavo Gavotti

As can be seen from the resolution, the Treasury was authorized to exchange BCRA government debt instruments for LeFi, which would be capitalized daily, although their negotiations could only be carried out between the Bausili-led organization and the banks. On the other hand, the base interest rate would continue to be managed by the monetary authority, but the costs would be borne by the Treasury. It was also approved that the interest would be credited to a special account as a guarantee for the payment of banking institutions.

“The MINISTRY OF ECONOMY, through the SECRETARIAT OF FINANCE, shall cover the financial costs of the operations that the CENTRAL BANK OF THE ARGENTINE REPUBLIC carries out for the management of the liquidity referred to in Article 4 of this decree. Said cost will be equivalent to the daily accrual of the monetary policy rate communicated by the CENTRAL BANK OF THE ARGENTINE REPUBLIC. The amount of the coverage will be calculated by the CENTRAL BANK OF THE ARGENTINE REPUBLIC and will be deposited as collateral in an account opened for this purpose in the aforementioned institution,” the decree specifies.

In parallel, this Wednesday the Ministry of Finance launched a new tender for peso debt for which it had no major maturities.

The schedule of obligations for repayment of the peso debt indicates that Finance will have to pay this Friday just over 1 billion pesos some Lecap. The question that was hovering over the market before the “Letter” was posted this Wednesday was what the Ministry of Economy would do with the interest rate.

In the last few hours, the economic group has been adjusting the details of the release of the new budget bill that will replace the Central Bank’s remunerated obligations, and in parallel, the Ministry of Finance has launched a new tender this Wednesday.

“The Ministry of Finance reports that in today’s tender $4.24 billion awarded having received bids totaling $5.91 billion. Proceeds from this tender in excess of the $1.05 trillion maturity will be deposited into the Treasury account at BCRA,” Treasury Secretary X wrote on his account. Pablo Quirno.

Unlike other operations, in this case there was no minimum bid set in advance, so all proceeds were raised through an auction held by the secretariat headed by Quirno. This Wednesday, three Lecap instruments were made available: one with a maturity of September 13 at a rate of 4.08% monthlyanother one on October 14th 4.19% monthly and the third to January at the rate 4.50% monthly.

Economic team moves forward with BCRA debt transfer Gustavo Gavotti

“This week we expect to hear news on new monetary policy bills that will replace the repo operations. In this regard, according to the press, they will be called “Fiscal Liquidity Bills” and the Central Bank will receive them by exchanging sovereign bonds adjusted for CER maturing in 2025, 2026 and 2027,” PPI noted.

Following the announcement ten days ago by Caputo and Bausili Bausili, part of the BCRA’s remunerative obligations will be eliminated. fell by 30 percent. Thus, they amounted to 11 billion pesos, of which about 7 billion came from the public sector and another 4 billion from private financial structures, he calculated. Romano Group.

Report EcoGo reflected that “on the first business day after the announcement of Phase 2, the settlement of Treasury securities (Dual Bond + Lecap) and the settlement of the tender last week occurred in parallel. Reserve reserves at the Central Bank increased by $4 billion (as of the beginning of the month), and government deposits in the BCRA increased by $2.8 billion, amounting to a total of $6.8 billion. The monetary base temporarily increased to $24 trillion,” he calculated.

“The other side was the reduction of the remunerated liabilities by $4.9 billion and the sale of BCRA bonds by an additional $1.9 billion (disarmament of most of the bank’s PUTs), so the net financing of the Treasury will be only $1 billion. On the monetary side, the Central Bank increased by almost $2 billion due to the disarmament of PUTs, and then decreased by $2.8 billion due to the increase in zero-rate deposits in BCRA (net tender financing). Overall, the government has shown some restraint in this latest round of the peso.

“In the middle, the Central Bank issued a communication that includes LECAP purchased on the secondary market, excluding the public sector exposure limit, so it continues to prepare the ground for a new monetary policy instrument,” the consultant concluded.

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