Bombs and fire: government and opposition clash over peso debt

Juntos por el Cambio called rates “impossible to pay.”


Opposition coalition Juntos por el Cambio questioned this Monday the sustainability of the debt in pesos taken by the national government. The government responded with barbed comments, triggering a protracted dispute.

The controversy started when Juntos por el Cambio’s national board issued a statement calling the peso debt a “time bomb for the next administration” due to its size and rates. “The national leadership expresses the rejection of dollar-adjusted financial instruments in pesos with rates that are impossible to pay, or in dollars at usurious rates,” the opposition coalition wrote.

Their press release added that the pesos debt grew by the equivalent to US$83 billion dollars, which generated a “peso financing crisis whose epicenter was in June 2022,” referring to the days previous to Economy Minister Martín Guzmán’s abrupt resignation.

On January 28, Juntos por el Cambio had called the peso debt “a short-term economic policy that mortgages our chances of development” in another statement.

PRO, one of Juntos por el Cambio’s parties, went even further and yesterday tweeted a gif of a dynamite cartridge going off. The animation, which read “AR$10,000,000,000 debt,” was accompanied by text that read: “the Central Bank’s debt forces the government to keep printing money and Argentines to live with 94.7% inflation.”

Yesterday, Economy vice Minister Gabriel Rubinstein tweeted in response: “Unlike the 2016/2019 period [Mauricio Macri’s administration], when debt was mostly issued in dollars, today the peso debt market constitutes the main source of financing for the Treasury.” 

Rubinstein added that the current administration also restructured more than US$100 billion of foreign currency debt securities, renegotiated the US$44 billion 2018 Stand-by agreement with the IMF and reached a new agreement with the Paris Club.

He also added that the government “rebuilt the peso debt market after it was ‘re-profiled’ (defaulted) by the previous government in 2019.”

The vice Minister also added that the debt-to-GDP ratio, “which had increased during 2015-2019 from 52.6% to 89.8%”, decreased 10 points by the third quarter of 2022.

Rubinstein pointed out that the Macri administration issued short-term, high-rate bonds. “The debt in pesos is absolutely manageable and sustainable,” he said, adding“Why don’t you say you are not thinking about re-profiling?,” he asked, referring to the term then-Economy Minister Hernán Lacunza used to describe his forceful debt restructuring in 2019.

Others also weighed in. Banco Provincia director Sergio Galmarini, brother-in-law of Economy Minister Sergio Massa, accused the opposition of “playing with fire” and pointed out that the Macri administration had defaulted on peso debt, devalued the currency, and implemented capital controls.

PxQ, a consulting firm headed by Emanuel Álvarez Agis, who served as Economy vice minister under Cristina Kirchner, issued a report that concluded that, should inflation be 100% this year, the annual rate for the Treasury would be at 0.67%, and the one for the Central Bank and the Treasury at -5.8%. “They don’t seem ‘impossible to pay’,” the report read.

In an interview with Radio con Vos, Álvarez Agis accused Juntos por el Cambio of seeking to cause a “financial crisis” with its comments, claiming that bondholders fear a new potential Juntos por el Cambio administration could default on the peso debt as they did at the end of their 2015-2019 government. 

“The leaders of [Juntos por el Cambio] should stand up and say whether they want to pay the peso debt,” he said.

Today, former Economy Minister Hernán Lacunza, who served during Mauricio Macri’s presidency in 2019, told Radio Mitre that he did not like the “war language” of Juntos por el Cambio’s document. Using the metaphor of a “balloon” instead of that of a “bomb,” the economist said that “they don’t want it to go off,” but that will happen “if we keep inflating it.” Asked whether a hypothetical Juntos por el Cambio administration would pay the peso debt, he answered that that depends on Fernández’s administration.

“If you have to rent a property and they ask you to pay delayed expenses, and the previous owner owes two months, OK. If he owes ten months, I can’t. It depends on what they leave,” he said, adding that peso debt represents “10 points of the GDP” per year with the private sector.

“How do you pay? By printing more money? That’s what took us to hyperinflation,” he said.

Moreover, while Lacunza was giving another interview, chief presidential advisor Antonio Aracre tweeted that the former Economy Minister was having “difficulties” explaining himself and accused him of an about-turn in his comments on the sustainability of the pesos debt.

“You shouldn’t play with fire if you don’t like being burnt. It’s our country that’s on stake,” Aracre finished.


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