Analysis of National Government Budget Execution – May 2020

Analysis of National Government Budget Execution – May 2020

The transfer of profits from the Central Bank to the National Treasury for AR$430 billion during May improved total revenues to face the higher expenses demanded by the health emergency and reduced the deficit in public accounts.

  • Primary expenditures increased by 45.1% year-on-year (YoY) in real terms, basically to cover expenditures made in the context of the pandemic, which amounted to approximately AR$160.86 billion during the month.
  • The increase in total expenditures slowed down to 21.3% YoY, mainly due to a 52.4% YoY decrease in debt interest payments.
  • Without the Central Bank’s help, the primary deficit would have totaled AR$265.34 billion and total revenues would have fallen by 35.8% YoY compared to the previous year.
  • The initial budget appropriation increased by AR$788.17 billion (16.2%), 93.4% of the increase being concentrated in social benefits (AR$541.23 billion), in transfers to the provinces (AR$124.92 billion) and in other current expenditures (AR$69.83 billion).
Public Debt Operations – September 2019

Public Debt Operations – September 2019

  • At the end of September, the Executive Branch submitted to Congress a Bill for the inclusion of Collective Action Clauses in sovereign bonds under domestic law. The Bill does not include a restructuring proposal but establishes the basis for such restructuring. It would affect domestic marketable government securities issued under Argentine law, which represent 24% of the gross public debt and of which it is estimated that at the end of September 2019 there was about USD27 billion in face value held by private creditors.
  •  Further measures were announced to cover the financial program in the last quarter of the year, and the ban on public credit operations to finance operating expenses was suspended for the rest of the year.
  • During September, there were placements of securities and disbursements for the equivalent of USD291 million and principal and interest payments totaling USD3.25 billion, of which 64% were amortizations. Interest payments totaled USD1.18 billion, of which 69% were made in pesos.
  • For the last quarter of the year, debt maturities are expected to be approximately USD16.75 billion between amortizations (USD11.46 billion) and interest (USD5.29 billion), of which 62% will be paid in pesos. The approval of the fifth review of the IMF Stand-By program and the respective disbursement is still pending.
Public Debt Operations – August 2019

Public Debt Operations – August 2019

  • With the financial markets facing an episode of extreme volatility, the Executive Branch announced in August a rescheduling of the maturities of Treasury bills held by institutional holders.
  • The rescheduling reversed the maturity burden: under the original terms, 77% of the payments were to be made this year. But under the new schedule, 72% will be cancelled in 2020. Estimated maturities for 2019 are reduced by USD9.3 billion, but because of the extension of maturities, an additional USD1.47 billion of interest will accrue with respect to the original payment schedule.
  • Placements of securities and loan disbursements for the equivalent of USD1.8 billion were recorded in August, mainly with transactions within the public sector.
  • Principal and interest cancellations for USD17.06 billion were made during the month, of which 96% were for repayments of principal. The major amortizations for the month were the cancellation of bonds issued as collateral for repo transactions.
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