TWO WORKS ON DEBT
THE NATIONAL DEBT OF ARGENTINA.
For Mr. Hector L. GIULIANO (16/04/2011).
This paper is an attempt to quantify the public debt of the National specifying the numbers that were raised in other previous note, also published by The Mirror of Argentina ("yellow alert on the public debt" of 09/02/1911) .
THE CENTRAL GOVERNMENT DEBT.
According to the latest official data from the Ministry of Economy Central government debt to 12/31/1910 is about 176,000 million (MD).
Much of this debt - approximately 77,000 MD - is owed to the public sector itself: the Intra-State Debt (which we refer in the article entitled precisely "What does the Debt Intra-State" of 16.11 .10, edited by the mirror at zero).
The fact that a significant amount of debt are so taken with the same state agencies obviously allows greater freedom of action and permanent refinancing but - as explained in the reference note - does not relieve the Treasury in the future, their cover obligations not de-funding government agencies lenders, as is the case of funds owed to retirees through ANSES or return of international reserves are assets of the Central Bank. That is, intra-state such debts are not neutral for the Treasury.
But back to the central issue of the amount of public debt in absolute value irrespective of the type of creditor, the debt we have a total of 176,000 MD.
Amounts are expressed here as always rounding and its equivalence to dollars, but the obligations are incurred in different currencies.
Currently, 40% of the debt is in pesos and 60% in foreign currency.
But - and here comes the important thing - this is not any real or central government debt.
Although debt registrations follow the accounting criteria of what is perceived, which reflects certain payment obligations to a particular court date (in this case, the end of last year) there are other very significant debt transactions also accrue specific obligations, even though their amounts can not be accurately pre-established, but that firm commitments are documented.
This type of obligations, which include concepts that are valid debt and accrued in the future but not shown in official data, we call unregistered debt.
UNREGISTERED DEBT.
There are three basic items unregistered debt (derived mainly from the mega-swap Kirchner-Lavagna, 2005) which are headed by the Central State:
1. Interest is compounded by anatocism, ie accrued and unpaid interest is added to capital and generate new interest.
The 2011 Budget provides for the payment of 9,000 MD of interest on public debt but has not indicated how much the amount is not paid but which is capitalized during the year, and would be in a minimum of 1300-1500 MD / year for the period 2011-2014, thus giving a cumulative floor 5,000 to 6,000 MD.
2. Indexing debt in pesos adjusted by CER, an amount equivalent to 38,000 MD and updated by the Consumer Price Index (CPI) official INDEC - which recognizes a 11% annual inflation for 2010 - means that the debt grows inertially about 4,000 MD per year.
Assuming that the CER-indexed debt (an index that replicates the CPI) is extinct in 5 years (half the average life of total debt, which is 11 years) and to maintain an official annual inflation rate 10%, this means that such indexing would bring the amount of debt this item to a tentative figure between 20 and 24,000 in the five-year MD.
Note: Actually, if the inflation adjustment official to remain in the order of 10% per annum and the exchange rate / dollar devaluation followed a half (5%) - as planned for the year 2011 - the figure of 24,000 could be reduced accordingly MD in their projection. But it depends on a combination of variables is now very difficult to predict: large differential against the assumption of average life (20,500 MD expire in the period 2033-2038, not 5 years), the evolution of peso debt with CER, inflation official devaluation of the peso against the dollar.
3. Since 2005, the Argentina Exchange is committed to additional payments to the new bondholders in terms of economic growth of our country.
These are called growth-linked or Stamp GDP (GDP UL), which set a cumulative annual payment per year when the country's GDP increases above 3% per annum, which has been occurring in more than recent years (except 2009) and estimated to be maintained in the medium and long term.
Javier Llorens (*), Cordoba, has estimated the total cost for this type of commitments - along full force - summary about 38,000 MD, of which 6,000 have already paid (including the 2,500 planned to turn this year) and remain to be paid in the future 32,000 MD. Officially
are Contingent Debt because it is not known in advance the exact amount but it is firm obligations that can be estimated.
The government could "liberate" themselves from the bondage of annual payments but this would have to buy the coupons GDP at market value (which today have a growing stock market listing), which would cost in cash of not less than 11 or MD 12,000, while the Ministry of Economy has not raised so far this variant.
This means that adding the three items of unregistered debt - in their estimates of minimum - the amount of it would be the order of about 57,000 MD (5,000 + 20,000 + 32,000).
Meaning Debt Actual Total Central State is not that of the 176,000 official MD MD but some 233,000.
THE NATIONAL DEBT.
Central State is not the only government entity that has debt. Therefore it is necessary to determine how much is the debt of Argentina as a whole.
The idea of \u200b\u200bnational debt aims to quantify precisely how much is this country really needs - a level of official bodies - regardless of borrowing window is used because, in short, all these items are additive, ie weigh as financial burden on the state and the people of the nation.
thus have an idea for what should be present in all the nation Argentina should join the central government - other than their own and complete - the obligations of all bodies and levels of government, which are essentially the following:
a) debt quasi-fiscal Central Bank (BCRA) of letters and notes (LEBAC / NOBAC), which are placed to sterilize the money given to buy dollars used to pay external debt with foreign reserves, and they now number about 25,000 MD.
b) The consolidated debt of all provinces - including the Autonomous City of Buenos Aires - whose latest official information (to 06/30/1910, after removed and the payment from the Revenue Sharing) was 96,200 million pesos, equivalent to about 25,000 MD (because at that time the exchange rate was at 3.93 $ / U.S. $).
As an important part of the provincial debt is owed to the Nation and BOGAR securities backed by nearly 10,000 MD (9800), it is not discounting that figure to take it twice, with net debt of the provinces would thus be in the order of 15,000 MD.
c) The public debt of the municipalities, which is a mystery: not published official information about such data although obviously exist and are monitored at national and provincial.
d) The same applies to the debt of the national authorities: Government Agencies, State Enterprises and Public Trust Funds or Trusts.
debt
This item is particularly important as the Central State guarantees - as well as the vast majority of the debt of the provinces - the fulfillment of their obligations, but the amount is unknown.
Suffice it to say that this year - according to Budget 2011 - is expected to issue national government guarantees in this item for a total of 18,000 MD (becomes clear: millions of dollars, not pesos), corresponding to loans to take mostly for the realization of public works and infrastructure.
What gives an idea of \u200b\u200bthe magnitude of debt that are handled this way.
So far the main items of public debt, along with Central State, complete what we call the National Debt or Debt of Argentina as a whole, and then it really amounts to between 273,000 MD (debt product central government debt including unregistered - 233,000 MD - MD over the 40,000 known debt of the provinces and BCRA) and MD 293,000 (if the 273 000 is added a sum of 20,000 MD more attempt by the national authorities debt municipalities, current and near collapse). Compared
these figures with the GDP - now estimated at about 350,000 MD - Debt to GDP would thus be in the order of 80%.
It should be noted, finally, computed here are not contingent debt judgments against the State appealable ruling or the amount of claims for ongoing cases (mostly, local and foreign pension lawsuits over allegations ICSID ) and also takes account of the Floating Debt and Liabilities, which tends to be increasingly relevant.
CONCLUSION.
As a result of all briefly explained here can be left raised the following:
1. The State government debt Central is much higher than the official debt shown by the Government.
2. The public debt of Argentina as a whole - Central State, Provinces, Municipalities, Central Bank and national bodies - found in high levels of financial alert even though the government (with the complicity of the corporate elite and the media information) fails to report the specific amounts of those segments of obligations.
3. In this context - and budget data in hand (which foretell an increase in net public debt of 9,400 MD Central State, plus the guarantees mentioned) - the so-called Public Debt Relief Policy is a lie.
In the event that some of the data obtained in this work can be wrong is obvious that the authorities would be useful they have any figures available and presumably accurate, because he talks a lot about the handling of INDEC's figures but no one talks about Handling - or much worse - the public debt of Argentina .-
Héctor L. GIULIANO
Buenos Aires, 16.4.2011.
(*) "Give to Caesar what is Caesar's, or protein forms of debt" by Javier Llorens (December 2010).
[to be issued without the table annexed]
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YELLOW ALERT ON THE PUBLIC DEBT.
For Héctor Giuliano (09/02/1911).
While the government claims that Kirchner is des-indebted state debts continue to rise, capital and interest payments increase and the stated goal of all negotiations is to return to international capital markets to take on more debt.
A false debt reduction.
The word debt reduction is a euphemism used to mean paying for such is the concrete action of the authorities and because the stock of public debt low but is changing its composition and deceleration only partially and temporarily, its growth rate.
The government is making payments to multilateral lending agencies (World Bank, IDB and IMF before) and is also making payments to certain creditors strong private, employing extra-ordinary financial assets and / or auxiliaries of the state: international reserves Central Bank (BCRA), temporary advances to the Treasury, utilities and ANSES Bank, resources of the Guarantee Fund of the Pension System Sustainability administered by ANSES resources revenue sharing fund contributions taken from National Treasury (ATN ) and loans from various authorities or agencies (Banco Nación Argentina, Trust Funds, AFIP, Lottery, PAMI, etc.).
This change in the structure of debt by creditor means that a large part of debts to third parties are paying the cost of increasing intra-state debt, which now reach nearly half of the debt or performing standard Central Administration.
In fact, the goal is to pay. However, despite the above payments and extra-ordinary amount obtained reductions in bond swaps made public, the stock of official debt is not only maintained but increased, in particular, the 2011 budget foresees a net increase debt of 9,400 million dollars (MD) during the year (because of cancellations by 27,400 new MD to take 36,800 debt).
This, considered on a stock of public debt as questionable as incomplete.
The issue is that information does not reflect the real picture of Argentina's debt situation: a) because it ignores the weight of the debt is not registered, b) because indicators show unequivocally, and c) because the figures do not encompass the entire Argentina's public debt.
unregistered debt.
The latest official information available - to 09/30/1910 - said that the Central government debt is about 161,000 MD, but this must be added other MD 11,000 of debt swaps entered in 2005 and 2010 (holdouts), bringing the final total is 172,000 MD.
But here are three items referred to relevant persons certain:
1. Interest is compounded by anatocism ie accrued interest is not paid and added to the new capital to earn interest, which would be a minimum of 1,500 MD per year and a maximum of 3,000.
2. CER indexation of debt in pesos adjusted by the official inflation, which currently would increase inertia than 4,000 MD per year (11% of 37,600 MD).
3. The heavy financial burden, cumulative rhythm, mean annual coupon payments linked to GDP, which for this year are about 2,200 or more MD. These
-linked product (GDP UL) were issued with the Kirchner-Lavagna megaswap 2005 on the basis of a notional value of 78,600 or MD reference and in accordance with a mechanism proposed by the IMF consultant Eduardo Borensztein, hired purpose. According
Javier Llorens, the total cost of these financial instruments would reach about 38,000 MD over its lifetime, the MD of 6,000 already paid (including those committed to the current year) and 32,000 remaining MD pay.
These three items are not included in official estimates of the Public Debt.
Index Debt / Product.
The government says it is partly out of debt because it pays debt to international organizations and private creditors, but does so with extraordinary resources and transferring the state itself growing debts (debts that have no proven ability to pay).
This sidesteps the problem of unregistered debt and conjures up an argument reducing the absolute amount of debt but as a percentage of Gross Domestic Product (GDP).
This index GDP ratio, however, is controversial because not properly reflect the repayment capacity and because it takes into account only the central government debt and not the whole national debt.
One of the major flaws in the information management of Argentina's debt lies precisely in the study of the problem by separating it from Central State all public jurisdictions in the country, as if the stock of debt weighing on a consolidated basis on the finances of the Nation.
Strictly speaking it is valid to speak of an index debt / GDP - manipulated or not - restricting it to compare the national government debt to GDP across the country, ie omitting computing the indebtedness of provinces, municipalities, state enterprises , trust funds and entities or public bodies in general, quasi-fiscal debt and contingent debt BCRA lawsuits against the state with firm decision: it is not only consistent to compare the debt of the State Central-ie, with a smaller number of index-versus GDP across the country.
The issue of the National Debt.
The total debt numbers are very different when we take the complete figures:
1. Central government debt is officially of 172,000 MD but here, as we said is omitted unregistered debt: MD between 1,000 and 3,000 annual compounding, 4,000 MD per year inflation indexed debt and contingent debt tied to GDP the order of 32,000 MD.
For this exercise is expected to increase net MD debt of 9,400 plus this year's budget authorizes in advance the contraction of more debt in the years ahead: 7640 MD in 2012, 5,700 in 2013 and 4,700 MD MD in 2014. Excluding new debt that is intended to take on international markets after arrangements with the holdouts and the Paris Club.
2. The consolidated debt of the provinces - to 31/12/2009 - is 105,000 million dollars (M $), equivalent to more than 27,000 MD. With the relative reduction produced later, following the partial payment of debt out of the partnership, this stock would be present in the 100,000 M $ (25,000 MD), of which over half are caused to the state. The debt is growing trend since the making of foreign debt that has been going by several provinces (Buenos Aires, Córdoba, Chubut and CABA). Since the National Government is the guarantor of these debts provincial (discount against federal partnership tax).
3. The consolidated debt of the municipalities of the country is a mystery: there are no official figures or estimates, despite several large cities have such problems.
4. The consolidated debt of state companies, trusts and entities or agencies is another important data as unknown in terms of indebtedness, and here the figures would rise at an alarming rate. Significantly, in the budget 2011-apart from its own debt increased to 9,400 MD said for the Central-State also provides government guarantees the national government for more than 18,000 MD for companies and government agencies: that is, new loans to public entities guaranteed by the Central Government.
5. The Central Bank is now a side window of the Argentine public debt.
The BCRA has strong debt liabilities linked to through the stock of letters / notes used to sterilize the weights that are issued to purchase foreign exchange, so that well - in an indirect way - the dollars in international reserves are purchased debt. With the aggravation that some of those dollars are then provided to the Treasury to pay debt. The Treasury then pays the foreign creditor, compensation puts him in a letter to the BCRA to 10 year term and the bank keeps the debt of Lebac / Nobac currency used to purchase (by paying a 13% interest) .
The large increase in intra-state debt of the Government with the Central Bank to pay third party debt is lowering the quality of the bank's assets, because the central government has not demonstrated its capacity to repay obligations in contracts.
6. Finally, it is considered the black hole of the contingent liability lawsuits against the State Case firm, most of which comes from retirement and causes in the external order of foreign court rulings in favor of vulture funds and / or companies that sued to Argentina before ICSID, being any quantification of these very hypothetical figures.
In all cases, these amounts should be added that consolidated public debt does not include floating debt or enforceable.
Phantom of Greece.
The recent debt crisis in Greece - direct analogy with the Argentine case - occurs when, after the transition to electoral politics, the new president Papandreou can hold no more lies of the public debt Karamanlis government dragged.
Something equivalent to what was the concealment of the debt crisis in Argentina over the Convertibility.
Greek Falsehoods played essentially three key points: 1. The concealment of the true amount and severity of the country's external debt, 2. Masking and falsity of the statement of debt-financed fiscal situation, which should reveal the lack of ability to repay it (real budget deficit), and 3. The complicity of government, creditors, banks, broker, credit rating agencies and multilateral lending agencies, in these criminal actions or directly irregular.
All operating, continued and / or monitored la situación pero cuando sobrevino la crisis se hicieron los desentendidos y apoyaron el nuevo macro-endeudamiento griego bajo severo plan de ajuste fiscal; y lo hicieron para salir de una crisis de deuda con más endeudamiento: más préstamos al país para que éste pueda pagarle así a sus acreedores.
Todas las crisis de deuda contemporáneas siguen invariablemente el mismo patrón: los gobiernos sostienen sus finanzas públicas en función de un mecanismo de re-endeudamiento perpetuo, ocultando las informaciones clave o de base que delatan las debilidades insalvables del sistema.
Mientras tanto el núcleo duro del problema de la deuda, que es la toma de obligaciones sin capacidad de repago, la illegitimacy of origin claims and the mechanism of corruption that feeds the system permanently Debt continues to mature.
This mechanism can be extended in time to the extent that successive governments remain in this dangerous scheme of perpetual debt.
Héctor L. GIULIANO
Buenos Aires, 9.2.2011
