Almost 90% of Neuquén’s debt was tied to the rise of the dollar

The governor Omar Gutierrez He will end his last year in office with a growing pressure from public debt servicing. The already significant amount of interest and amortization that the province of Neuquén had planned to pay in 2023, of 69,850 million pesos, will increase due to uncertainty due to the increase in the dollar and inflation that does not diminish.

According to the official information that the government sent to the deputies to request the authorization that allows it to use the money from the anti-cyclical fund to cover financing gaps, 95% of the stock of public debt is subject to “macrofiscal variables that depend and are conditioned to the Argentine economic reality and to the public policy decisions carried out by the National State».

The breakdown of this scenario reveals that a 89% of maturities are directly related to the price of the dollareither because it is a debt originally denominated in dollars (such as the international titles Ticade and Tideneu issued by the province) or because the payment adjusts to its variation (linked dollar).

In this year’s budget, the government had indicated that this percentage was 82%, but the issuance of Letras del Tesoro that it made at the end of March included more than 5,400 million pesos in dollar linked instruments plus interest rates between 2.49% and 6% which will be paid on a quarterly basis starting next month. The amortization, on the other hand, will remain entirely for the government of Rolando Figueroa, in 2024 and 2026.

The other portion of debt subject to national macroeconomic variables is the 6% that is affected by inflation, since the capital adjusted according to the Reference Stabilization Coefficient (CER).

The government found in this instrument a good ally for its latest emissions, after its use was authorized for the provinces in 2021.

«With the increasing levels of inflation that have a greater impact on the expenses than on the resources of our jurisdiction -which demands increasing levels of financing- the possibilities of the Provincial Treasury to assist the growing deficit of the ISSN become unsustainableon the other hand, affecting to a greater or lesser extent their ability to meet their own payment obligations linked to the public debt”, the government justified the request to the deputies to take money from the anti-cyclical fund.

On Tuesday the Minister of Economy, Guillermo Pons, is expected to send a report on debt services to the budget committee that remain for this year and those projected for 2024 and 2025, which will be even higher. Figueroa He has already taken note of the pressure that the public debt will exert on his management and even anticipated RÍO NEGRO that will seek a “flattening” of the maturity curve.