The Economy Ministry passed its last financial test of the year this Wednesday, successfully placing bonds for AR$326.61 billion. The auction means the government ended 2023 with net financing of AR$700 billion.
The financial instrument menu was made up of three bonds: the “Lelite”, with a January maturity date, and two “Ledes”, with April and May maturity dates.
The effective interest rate was 110.1%, slightly lower than in the previous bond auction. Likely an effect of inflation taking a downturn in November, the government didn’t need to increase the record interest rate.
This Thursday, the government placed an extra AR$17.79 billion in the second round of the bond auction.
Now, the government has a clearer path for the January maturities, which are some AR$1.13 trillion, of which only AR$800,000 are privately owned. With that accomplishment in their pocket, the Economy Ministry hopes to make its 2023 financial program public in the first week of January.
According to government calculations, the first part of 2023 is covered debt-wise. Since 82% of the maturing debt is in the hands of public agencies and banks, no rollover problems or new debt swaps are expected. They will issue two new financial instruments in response to market demands, but no further details have been made public so far.
During 2023, the government will aim to finance itself in the local financial market through public auctions. This will help to significantly lower monetary emission, a crucial aspect of the deal with the IMF. The Ministry also thinks this, accompanied by tighter fiscal discipline, will help reduce inflation, something they hope will happen sequentially in 75-day periods. The decrease in the price hike would also allow for the reduction of the interest rates.
The Ministry also assures that deficit figures, which will be released on January 20, will be aligned with goals set by the IMF. They hope for a cumulative primary deficit of some AR$2 billion.
The next bond auction is scheduled for January 18.