A few days ago, Economy Minister Luis Caputo confirmed on his X social media account that on January 9, the country will pay nearly US$1.6 billion to holders of the sovereign bonds restructured by former Economy Minister Martín Guzmán. Although the Central Bank has purchased dollars daily, accumulating close to US$2.9 billion throughout Javier Milei’s presidency — and a steep devaluation — the government faces 2024 with large public debt maturities in foreign currency that far exceed the country’s holdings, which are still in the red. These large payments will require a rapid recovery of the country’s bank reserves.

In 2024, the Treasury will face foreign currency maturities of around US$16.8 billion — US$7.5 billion with the International Monetary Fund. As for public securities, maturities total US$4.4 billion, although about half of that is in the hands of the public sector. The remaining US$5 billion is for obligations with the Paris Club and other organizations.

Ecolatina’s head of research Santiago Manoukian, analyzed the flow of foreign currency: 

“The IMF disbursements between December 2023 and December 2024 would currently total almost US$6.6 billion. December [2023] is not in yet,” Santiago Manoukian, head of research for consulting firm Ecolatina. “So, considering the payment that has already been made by Argentina in December, US$920 million, net payments to the Fund in this period actually total around US$1.9 billion — payments of US$8.5 billion, disbursements of US$6.6 billion. 

All of this will depend on the agreement’s renegotiation, where the government could try, for example, to avoid any net payments to the organization this year.”

The months with greater due payments will be January and July. In January, commitments are close to US$4 billion (approximately US$2 billion of which is due to the IMF). The government will also face coupon payments and the first amortization installment to bondholders for almost US$1.6 billion. The rest are debts with the Paris Club and other international organizations. 

As for July, maturities will be approximately US$3.9 billion. Of that total, US$2.8 billion is owed to bondholders, US$500 million to maturities with the Fund, and the remainder with the Paris Club and other institutions. After that, the amounts are smaller but still challenging for a Central Bank given its negative net reserves.

Since Milei’s inauguration, the Central Bank has accumulated purchases for almost US$2.9 billion, which would allow them to fulfill the obligations with bondholders on January 9.

In context

Pedro Siaba Serrate, head of research and strategy at Portfolio Personal Inversiones, pointed out that net reserves are still negative at around US$9.7 billion despite the new government’s purchases.

“However, the market always gets ahead of itself, and thus focuses on the perspective of the coming months, where we should see a greater fiscal prudence, a potential normalization of the exchange market, and a favorable coarse grain harvest,” he said. “This context, which promises a greater accumulation of reserves, and lower financing needs, allows us to be optimistic regarding payments in 2024.”

Put in perspective with the upcoming years, 2024 will be the year with the lowest amount of due maturities of the next decade, according to information from Portfolio Personal Inversiones. The agreement with the Fund at the time of writing states that maturities in foreign currency amount to US$17.5 billion in 2025, US$18.2 billion in 2026, with a peak of US$22.2 billion in 2027, and US$21.7 billion in 2028. Until 2035, maturities do not fall below US$14 billion million per year, including maturities with the IMF, bond, and other multilateral organizations.

Originally published in Ambito.com / Translated by Agustín Mango