Amidst the discussion of the 2019 Budget bill in the Chamber of Deputies, the Secretary of Finance Santiago Bausili supported the proposal introduced by the Executive branch that modifies the Financial Administration Law, which establishes debt restructuring conditions. The aim is to enable the Executive to refinance maturities according to “prevailing market conditions”. The ruling party said that if they do not have the opposition’s support, they will rule on the bill nevertheless by October 17th.
Secretary Bausili explained that the current law obliges the government to face complete maturity dates without being able to manage them in time. Thus, it restricts the possibilities to improve the maturity profile when the restructuring implies an increase in amount, rate or term. Therefore, the Executive has to wait for the price of bonds to fall under its price of emission, without taking into account market conditions.
In this regard, the Ministry of Finance officer highlighted the cases of Peru, Colombia and Uruguay as successful examples in the administration of liabilities, particularly in the reduction of debt in dollars and the transfer to local currency. Also, he mentioned the transactions carried out by the subnational governments of Neuquén and Buenos Aires to reschedule maturities. However, opposition political party members stated that the replacement of short-term bonds in dollars does not favor a liability management policy and raises doubts regarding the framework within which the modification of the law is proposed.