The Central Bank Interest Bearing Debt (BCRA) popularly known as “Leliq ball”, set a new record on Monday with over $20 billion ($14.71 million in these instruments and another $5.32 million in repos). This amount corresponded to between 11 and 11.5% of the gross domestic product (GDP).
Liability multiplied 18.2 times (US$1.1 billion when he took office) during the term of President Alberto Fernández, who called it a “usury” in the last presidential election and even promised to do so To use money that the company had spent to keep it. Regularization was made to increase pensions by 20%.
Of course he didn’t do it later and This bill, which amounted to $57,000 million per month (paid at a nominal annual rate of 63%), grew to $1,613 billion due to the exponential increase in this debt. and the increasingly higher interest rate it had to pay to maintain it in the face of persistent and high inflation.
In this way, the monthly interest payment of the Lebac (as these titles were called in Mauricio Macri’s time) was equivalent to a third of the monthly expenses that the government faced in retirement and would cover almost the entire amount today.
The so-called Liquidity Letters (Leliq) are the main instrument through which the BCRA withdraws from circulation some or even all of the pesos it has issued in unit rates to help the state treasury cover its severe and persistent deficit.
This makes them one of the banks that currently pay a nominal key interest rate of 118% annually, which they in turn use to remunerate their savers’ fixed-term deposits in order to neutralize any inflationary effect or pressure on the dollar.
However, as can be seen, this function is no longer fulfilled due to the size that this “ball” has reached and the maintenance costs that have increased in recent years. Analysts therefore speak of a debt that has taken on a life of its own, since it does not even serve to sterilize pesos given the ongoing decline in money demand.
“It is a liability that has grown at a high nominal rate since the middle of last year, when the inflation rate rose and the interest rate began to change positively in real terms.” The endogenous expansion of the money supply resulting from interest paid (already more than 8% per year as a percentage of GDP) puts the current monetary system in a dilemma as debt services are capitalized through sterilization by paying more interest. described a recent report on the topic from Quantum Finance.
There is already as much money in the full peso parking lot managed by the BCRA as just over three monetary bases (the sum of the money circulating in the hands of the public and the liquidity that commercial banks have). registered accounts. before the monetary unit today is around 6.2 billion US dollars). Only the endogenous emission that generates the payment of their interest, projected taking into account the effective annual interest rate of 209.45%, is sufficient Doubling the current monetary base in about 80 days.
This explains the deteriorated equilibrium that the monetary unit presents. “Today, of all four pesos that the BCRA has printed, three are in its reimbursed liabilities and only one is required as monetary base.” explained economist Martín Vauthier, director of the consulting firm Anker Latin America, days ago.
And that even means, for example, that the IMF has forecast in its plan last Personnel report that this debt will represent a historic 15% of GDP at the end of the year as it continues to grow amid an economy already in recession.
“Compensated liabilities (passports and Leliq) now account for 300% of the monetary base. “Beyond balancing the budget, which is a necessary but not sufficient condition for stabilizing the currency, it will be necessary to find a solution to these debts,” warns financial analyst Cristhian Buteler.
It is a very short-term debt that, despite being in the hands of regulated entities (banks), must be renewed 13 times a year.
This is what the economic teams of the various candidates in the race are beginning to discuss, given the risky legacy they will receive if they manage to win the next elections.
They are the ones who are currently exploring the possibility of disabling this snowball with the lowest possible costs and within a reasonable period of time as a starting point to be able to think about any kind of disarmament of the stocks.