Massa and Fernanda Raverta, boss of ANSES, whose “Sustainability Guarantee Fund” holds most of the dollar securities that the government will exchange for pesos.

The Faculty of Economics of the University of Buenos Aires (UBA) will publish in the next few hours a favorable opinion on the operations of exchange of securities in dollars for securities in pesos with which the Ministry of Economy intends to have a more great impact on the price of financial dollars which complicate the official exchange policy.

The report is unequivocally positive about the move. Under the title “Opinion on the operation of sale and exchange of bonds of public entities” it affirms that the operations proposed by the Economy and put to its analysis “do not correspond to any direct impact on the assets to be collected by the beneficiaries of the pension agency”. In other words, they will not affect the values ​​of the pensions and pensions paid by ANSES.

It happens that, explains the opinion, “the Sustainability Guarantee Fund” (FGS) constitutes a stock that should not be confused with the flow corresponding to the periodic payment of assets.

In fact, he continues, “the FGS has never been used to solve the shortcomings in the financing of the public pension system or to preserve the amount of benefits payable by ANSES”.

“The Sustainability Guarantee Fund” (FGS) constitutes a stock that should not be confused with the flow corresponding to the periodic payment of assets”

For this reason, says a summary “both the sale and the exchange of public securities would not involve a loss of assets for the public organizations affected. On the contrary, both operations involve revaluations of capital at the time of their realization”.

In the case of the sale of Argentinian securities (Bonares), he continues, “the capital gain is nearly +46% following the sale and subsequent subscription of the 2036 double bond for 70% of the proceeds Additionally, organizations receive the remaining 30% in cash.”

On the other hand, he explains “the exchange of global bonds implies an average revaluation of the portfolios of public bodies of around +104% on average”, although he specifies that “this valuation is reduced if we take the prices market potential of securities for exchange, the results continue to be positive for the organizations affected by this measure (+23.4%)”.

The Secretary of Finance, Eduardo Setti, one of the architects of the measure, alongside Carlos Cleri, the representative of the Economy at the BCRA, who had previously passed through the FGS of Anses
The Secretary of Finance, Eduardo Setti, one of the architects of the measure, alongside Carlos Cleri, the representative of the Economy at the BCRA, who had previously passed through the FGS of Anses

From which he concludes that the foreign exchange operations proposed by the Ministry of the Economy “have a neutral effect on the total indebtedness of the consolidated public sector since they only involve a change of assets within the organizations which make it up”.

The analysis of the UBA professionals focuses their analysis on the FGS managed by ANSES, because this represents the bulk of the holdings involved in the transfer and/or exchange operations and had been the most most contested of the proposed transaction.

In its more technical aspects, the opinion, which bears the signature of professionals of Economic Sciences Julian Gabriel Leone and Daniel Alberto Milia responds to questions posed by the economic portfolio itself related to Annexes I and II of Decree 164 by which the executive power, at the request of the economy, ordered the foreign exchange operation.

However, the signatories of the opinion recognize its limits by specifying that although the questions formulated by the Minister Sergio Massa ask “exclusively they ask to evaluate an accounting profit or loss in the portfolio of the organizations concerned, according to the principles of objectivity, rigor and independence of the FCE-UBA” to assess the “overall consequences” of the operation, “beyond the effect on the valuation of the assets constituted (…) a complete macroeconomic analysis would be necessary which goes beyond this technical report”.

Indeed, he continues, “the favorable valuation of the portfolio in terms of technical value is achieved at the cost of an extension of the average lifespan of the portfolio of the organizations concerned, which is why increases in local interest rates or international organizations could negatively affect their performance.

He also recognizes something that had been heavily criticized by opposition economists, such as the former economy minister Hernan Lacunza, concerning a hasty sale and very low parities of the securities. It does so by emphasizing that the operation of “detachment” of securities proposed in the annexes “validates low parities on the current market”.

The signatories cover themselves in this respect, specifying: “it is outside this report to assess whether the haste to carry out the operation would have had similar accounting profit margins in more stable financial scenarios”.

And they add: “Even in the face of immediate local currency liquidity following the 30% sale of the Bonares mentioned in question #1, the larger extension of terms implies a decrease in foreign currency liquidity for the new titles”.

It so happens, continues the report, that the execution of the operation under analysis “at currently low parities, should be evaluated at rates compatible with scenarios of greater economic stability. If this were the case, the accounting profit shown here would be considerably lower, taking into account the higher cost that the sale or transfer of securities at a discount implies for public bodies”.

In addition, the technical report specifies that for the results it records, it has adhered to a rate of return of 8% per year “as specified in Annex III of DNU 164/2023, without this implying a prospective analysis as to the sustainability of the debt or the conditions for its future refinancing”.

In any case, he points positively to “the consolidation of the management of the funds and the holdings of financial assets of the various bodies of the National Public Sector established in the Decree”.

Leone, 32, is currently studying for a doctorate in economics at UBA, where she obtained her bachelor’s and master’s degrees in economics and for one semester she participated in an academic exchange of master’s studies at Bocconi University from Milan, Italy, in addition to completing a Capital Markets Specialist Course from the Argentine Stock Exchange and Markets (BYMA).

Miliá, the other signatory, 36 years old, is currently preparing his doctoral thesis in economics from UBA, he holds a Master’s degree from the same house of studies in economic and financial risk management, he is also a specialist in Capital Markets BYMA and graduated with honors with a BA in Economics from UBA.

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