An investigation carried out by economist Julio Pierkarz signals the total public debt Macri´s administration has received, taking into account trials resulting from the last governments reform of the pension system, Argentina´s total public debt would add up to US$ 303 000 million, or 58.8% of its GDP. Without this, the debt would reach 283.024 million dollars or 54.9% of the GDP.
Furthermore, the well-publicized policy for debt reduction was only complied with for the initial 2003-2008 period, in which Argentina amassed a fiscal surplus of US$12 600 million. Afterwards, from 2009 to 2013, the government amassed a financial deficit of 63 000 million dollars. This means the total fiscal deficit amassed by 2013 amounts to US$ 52 000. In the same period public debt grew by US$ 51 000 million. Afterwards, in 2014 and through 2015, Argentina´s fiscal deficit worsened significantly, adding up to approximately US$ 66 100 million and leaving a negative balance for the three Kirchner administrations of 118 000 million dollars as a result of the enormous growth of public spending in relation to earnings.
SENIOR CITIZENS AND THE CENTRAL BANK PAYED FOR THE PARTY
Another key point noted by Libertad y Progreso is that analyzing the total debt is made difficult by the fact the government received financing from the central bank. Between 2008 and 2013 the Treasury received 20 000 million dollars in the form of Central Bank utilities, which allowed it to have a monetary base from which to finance public spending without taking more debt, deteriorating the bank´s balance. To this phenomenon we have to add the payment of the public debt with reserves from the bank, which meant bond have to be issued incrementing debt. Over this period the central bank financed a total of 30 000 million of the US$ 52 000 deficit mentioned above. Part of this cost was transferred to citizen as higher inflation, making inflation one of the most significant problems to solve.
Furthermore, another significant portion was financed by transferring money from the ANSES (Argentine Social Security Agency) that cannot be considered genuine earnings either and represents an increase in the debt for future pensionaries.
In this context Libertad y Progreso explained that any way of getting out of debt should concentrate in gradually reducing fiscal deficits. “To do this one shouldn´t draw upon the Central Bank´s reserves, or the ANSES, or other official bodies to cover the deficits. Furthermore, the assets and equity of the Central Bank should be repaired and the quantity and quality of its reserves should be recomposed. The 2016-2019 period will not be enough for the Central Bank to fully recover, but it could represent a starting point. And during the 2020-2023 a firmer debt release policy could be applied” they highlighted from the organization.
“Even with a rational program of gradual reduction of fiscal imbalances, debt would increase to 61% of Argentina`s GDP by 2019 and could be reduced only the following presidential term. The only alternative to reduce it over the next three years is threw a reduction of public spending in real terms, it could never be achieved by increasing taxes. On the contrary, it can be expected that political pressure to reduce taxes will grow given that their current level is extraordinarily high” they continued.
From Libertad y Progreso they added that this analysis does not include the emission of new bonds that will be necessary to contemplate payments due because of trials won by pensioners which are estimated at US$ 20 000 million (assuming that of the 300 000 potential trials, and with 300 000 PEN already lost, the final number of trials lost by the State will be around 500 000).
2014 & 2015: KEY YEARS FOR THE DEFICIT
According to the studies performed by Libertad y Progreso fiscal deficit was aggravated in 2014, reaching 20 800 million dollars. If the financial deficit is added this sum reaches a total of 29 600 million dollars (around 5.7% of the GDP). Taking into account capital amortizations, the total need for financing in 2014 was of US$ 43 600 million. This was financed with US$ 12 200 million from capital renewal and the capitalization of interests from the ANSES, around US$23 700 million coming from the Central Bank (US$ 9 100 million in utilities, US$ 11 800 as debt and US$ 6 500 in bonds). This means 90% of the deficit, or 39 500 million dollars, was covered by wither social security, the central bank or other organizations within the State. To cover this debt has to be emitted in the form of bonds: bonar and bonar2014 to pay for the expropriation of Repsol. In total bonds were emitted for US$ 37 240, to which we have to add an increase of US$ 3 700 million in the debt with the Paris Club. This way, the total debt debt of the Treasury increased by 37 240 million in 2014, reaching 50,1% of the GDP.