The balance of the Treasury Bills (Letes) exceeds $ 1,500 million, a figure never recorded before.
The card of Salvadoran government credit has reached its limit. According to a document from the Ministry of Finance, posted on the Fiscal Transparency Portal, as of April this year the balance in Treasury Bills (Letes) reached $ 1,487.1 million.
But also with the issues made between April and May in the local stock market, for around $ 46 million, the balance in Letes reached $ 1,500 million.
The figure, considered by economists as “historical” or “never seen before”, almost reaches $ 1,566 million, that is to say, 30% of the country’s current income, which is the limit of what the government can use, according to it is established by the General Budget Law.
In March of this year, the government also placed $ 483.6 million on the stock market in Treasury Certificates (Cetes), also considered a short-term credit instrument.
Last year it closed below $ 1,000 million in Letes, but as of April 30 of this year the negotiation already amounts to almost $ 1,500 million, confirmed economic analyst Luis Membreño.
“This was already the 30% limit established by law. As the maturities of each month come, the government will have to seek to pay or refinance that debt… But what it has been doing is refinancing, ”explained Membreño.
The economist maintained that part of the increase in short-term debt is due to the impact of the pandemic, since the government issued $ 426 million in Letes under the argument that it was to serve those affected. Of those funds, he used $ 375 million to deliver a $ 300 grant to 1.2 million households, according to what he has reported.
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According to Membreño, that amount is a bridge loan that the government must return to banks within a year, because the funds are part of the bank’s liquidity reserve.
Carlos Pérez, economic analyst and fiscal advisor to the International Monetary Fund (IMF), opined that the government did indeed use the Letes as a rapid debt instrument to finance the transfers of $ 300 to families affected by the pandemic and to defray other expenses of the emergency.
That raised the balance from $ 1.05 billion added by Letes last February to $ 1.5 billion as of June 18, 2020.
With the issuance to date, the balance reaches a level never seen before, so it becomes unsustainable, as it is about debt to pay in the short term, either in 90,180, 300, 330 and 360 days.
Pérez added that the Cetes should strictly join the Letes, but the government does not. “They have generally been used as bridge financing, while long-term bonds are issued,” he said.
Both economists agree in affirming that the $ 426 million that have increased the balance of short-term debt, are amortized with the resources from the multilateral loans and the bonds that will be issued soon.
“If he did not succeed, (the Executive) would have to find another alternative to be able to pay the banks,” said Membreño.
In his opinion, the government should also analyze interest rates in international markets, which reached 9.5% in May, fell slightly in June, but are on the rise again.
The government also seeks to obtain another $ 1 billion to support the country’s productive sector, which would be $ 3 billion managed by the arrival of the pandemic in the country.
In any case, Membreño assured that the government will take on a new debt That adds up to $ 4.1 billion ($ 3 billion approved by lawmakers; $ 645 million approved in late 2019; and $ 426 million in Letes).
With these new loans, the public debt would exceed 90%. In fact, the Minister of Finance, Nelson Fuentes, estimates that it could reach 93% at the end of this year.
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