“Retirees’ money” was the axis of the financial storm unleashed, paradoxically, by who was one of the protagonists of encouraging the nationalization of the pension system and the creation of the so-called Sustainability Guarantee Fund (FGS).
In reality, said fund (created in 2008 at the request of the then Amado Boudou, who led ANSES and who had already been working since Sergio Massa’s management at the head of the organization) inherited the holdings of the AFJPs when their portfolios were absorbed by the State . They were made up of shares of companies listed on the stock market (something logical to avoid subjectivity in volume so as not to affect the stock market with its large volume. But it was also filled with public securities, something usual in pension funds around the world , but whose percentage grew as the Treasury’s needs grew, so much so that, at the beginning of March, said bonds (in pesos and in dollars) made up 78% of the total, some US$56,000 million.
other funds. The concept of a fund with very long-term assets has its raison d’être in pension systems in which the capitalization factor is the most important. It is not necessarily privately managed (like the Chilean or the Argentine was): For example, among the most powerful funds in the world is the Norwegian pension fund, which accumulates backing of US$1.3 trillionfighting for first place with none other than Chinese Investment Corporation ($1.2 billion). The rest of the others that appear in the top ten have in common that they are the result of the accumulation of extraordinary income resulting from the exploitation of natural resources (oil, gas or mining) that fulfill the double role of financing their own development and maintaining a reserve to go in the “lean cow” season.
Argentina could have established a fund of these characteristics, but the activity that could have generated these incomes is agriculture, starting with soybeans. But for this, governments in the last 20 years decided otherwise: apply withholdings of up to 35% and segment the exchange rate, which is ultimately an additional tax. In other words, it appropriated said differential to finance the fiscal deficit black hole, product of having increased consolidated public spending by more than 15 points of GDP in that period. Especially when said jump was explained by three reasons of a political nature: subsidies to public services, discretionary transfers to the provinces and the red pension, since spending grew much faster than its resources.
emergencies. Definitely what triggered the measure to concentrate the management of public assets was not changing the profile and use of the FGS but rather the strangulation of the external sector. Several measures warn about the critical situation of the exchange market. First, the prospects for foreign exchange earnings are pessimistic: the drought already threatens to take US$20 billion from what was collected last yearbut also because the successive Soybeans I and II were anticipating liquidations that allowed the good results of last year.
The reserves are at a minimum level and what is in doubt is the fulfillment of the goal of accumulation of reserves committed to the International Monetary Fund. So far this year, the central bank sold $2.8 billion and the bleeding is daily due to the demand from importers (despite the stocks), deferred payments that are due to last year’s operations and to intervene in the financial dollar market. To this were added requests from banks to deal with the withdrawal of deposits from individuals. TO the US$37,000 million of accumulated reserves in the Central Bank, foreign currency deposits totaled US$19,264 million (as of March 22), of which a part are private, the most sensitive to the ups and downs of the economy. The Economist Fernando Marull estimates that heFull availability liquid reserves are already negative (-US$4.980 million), without considering gold and SDRs (Special Drawing Rights).. The consultant ecolatin calculates, according to the IMF methodology, that at the end of March the net reserves would be just over US$1,000 million when the goal agreed with the IMF was US$7,770 million and US$4,770 million after the easing. Nothing that, for this first quarter, the IMF cannot solve with some accounting movement or forgiveness for the “drought effect”.
anchoring. George Hilleconomist of IDESAis forceful: it points out that currently the Sustainability Guarantee Fund is useless because more than three quarters of its portfolio is made up of public securities of a State that is melted down. “The pension system has a somewhat deficit and for that reason the Government needs to finance itself in any way. But the Argentine State does not save, on the contrary, it generates debt and dissaves”underline.
Among economists there is a consensus that the real reason for the bond swap (they give state agencies pesified bonds but adjusted for inflation) is to have tools to have “fire power” in an indomitable market: the dollar market. financial instruments (cash with liquidation for companies or the MEP for individuals) that thus mark the gap with the official exchange rate. Many eyes were placed on the virtual indebtedness at very high effective rates of return (more than 40% per year) which means the fact of being able to sell these bonds to individuals and thus increase extra-state indebtedness.
The titles involved are the Bonares (AL, bonds under local law) and the Globals (GD, bonds under foreign law) and they are instead given a dual Bond (indexed by CER or by “link dollar”) maturing in 2036.
For example, the vice president of the Central Bank Lucas Llac, a member of the Juntos por el Cambio economic ideas powerhouses, affirms that it is a mistake to raise the issue as if the “retirees’ money” really existed. From another political position, Emanuel Alvarez Agis, former Vice Minister of Economy during the administration of Axel Kicillof interprets that putting the focus on the patrimonial impact on the stock of assets of the FGS is a remnant of thinking of the pension system as capitalization when 15 years ago it returned to being pay-as-you-go. “Today current taxpayers finance current retirees, and that increasingly, for the wrong reasons, is done with general income, not with specific contributions”, he explained to Bloomberg in a recent interview.
In conclusion, the pension fund that resurfaced interest in the public debate, in reality in the face of the danger of being emptied because the Government’s haste to obtain dollars is discounted, in reality it has already been emptied throughout all these years in which the pension system has They were adding obligations (beneficiaries of moratoriums without previous contributions) and they were adding more bonds of dubious support to their assets. An equation that in no way resembles the sustainability pursued by the FGS.
