The Government’s Debt Swap: A “Successful Exchange” at the Expense of Public Organizations and Retirees

The government launched a new debt swap with which it managed to clear for 2024 and 2025 maturities for $7.4 trillion, of the $9.5 trillion that it sought to reshape, speaking of a 78% adhesion. Thus, it consecrates a “successful exchange”, as referenced by the ruling party, but what they do not clarify is that 70% of this adhesion corresponds to public organizations, a mortgage that operates to the detriment of the population’s living conditions.

For this, the role of the Central Bank is fundamental. According to private calculations, the agency issued some $400,000 in the last week to buy bonds in pesos in the secondary market, essentially from state agencies, which were turned over to the swap operation. This is in addition to the 1.3 trillion already disbursed in the first five months of the year for these purchases of public securities. With those pesos, state entities go out to buy new bonds in Treasury tenders. Thus, the Central Bank is indirectly financing the National Treasury, in a context of disarmament of holdings of private creditors to run against the dollar, in the face of the distrust of payment of such a mortgage by the State. This enormous increase in monetary expansion works as a spur to inflation and refutes that the problem is the payment of retirement or social programs, as blocked by Juntos por el Cambio or Milei.

The policy against the coffers of public entities to finance the indebtedness scheme has also been seen very clearly in one of the latest measures carried out by Economy, which implied that the public sector, such as Anses, get rid of its holdings in dollars in exchange for Treasury securities denominated in pesos to contain the rise of parallel dollars. That is, they stole from retirees to finance the run.

Thus, the government puts its hand in all the boxes it can, something that is also celebrated by the IMF, which imposes that the State must finance itself through the acquisition of debt to cut the issuance and advance in the fiscal adjustment. In turn, he demonstrates the opposite of what the Ministry of Economy came out to say when it maintained that the “successful swap” was the expression of market confidence.

Such is the case that 74% of private creditors rejected the swap, which shows that the distrust of the time bomb that public debt means is still present. “Taking as a reference the estimate of the Consultant 1816 that 30% of the $9.5 trillion of the titles in question were in the hands of private parties ($2.85 trillion) and assuming that 100% of the public organizations agreed to the exchange, the approximation is reached that the proposal was accepted by only 26% of private sector investors, including banks and mutual funds, among others”. (Bloombergenline8/6)

Thus, the government continues to enlarge a mortgage that the workers with the greatest hardships will pay. It is necessary to put an end to the flight of foreign currency by nationalizing the banks under workers’ control, repudiating the external debt and breaking with the IMF.