The government says that by stopping the debt payment this year alone, it could buy more than 380,000 respirators to fight the coronavirus

“Today we cannot pay and we cannot do it for several years,” said the Minister of Economy today. Martín Guzmán when he presented in Olivos, together Alberto Fernández, Cristina Fernández de Kirchner, Horacio Rodríguez Larreta, Sergio Massa and governors, the offer of the Argentine State to restructure the debt with private bondholders.

“We are going to change the debt bond structure, for another: three-year grace period, until 2022. I would start paying an average coupon of 0.5% in 2023 and those rates would grow to sustainable levels. The average interest of the proposal is 2.33%. We have tried to understand the creditors. The proposal is more interest reduction than principal reduction. Reduction of USD 3.6 billion, removes 5.4% of the stock of external debt and interest reduction of USD 37,900. million, which is 62%Guzmán explained.

Moments later, the finance secretary sent details of the offer, or at least what it represents in terms of numbers.

There, for example, it details how the maturities are until 2030.

In addition, the government made a somewhat whimsical comparison of what savings the acceptance of the proposal by private bondholders could mean. Something that, a priori, seems to have low chances of happening, as detailed Infobae.

He used parameters very in the minds of Argentines at this time, such as automatic respirators, AUH, Anses Bonuses and Food Cards.

There, by case, it is assured that with the USD 4.500 million that the government would “save” –it would stop paying, strictly speaking–, Only this year you could buy one of these six options:

– 386,663 National industry respirators

– 3.2 times the budget currently assigned to the Ministry of Health for all of 2020.

– 1.7 times the monthly expense in the total of Retirements and Pensions

– 93.4 million AUH (16.7 times the monthly expenditure on AUH).

– 57.9 million Food Cards (currently there are 1.1 million)

– 29 million IFE (3.7 times the total number of beneficiaries announced)

When the comparison is made with the rest of the debt, between 2020-2025 and for a total of USD 34.1 billion, the authorities estimate that they could be used to:

– 2.9 million respirators national industry

– 439.9 million Food Cards

– 219.8 million IFE (28 times that granted to current beneficiaries).

– 205.9 times the budget of the Progresar Scholarships

– 12.9 months of Retirement and Total Pensions

Furthermore, the paper The Government tries to describe the current context by detailing that the gross financing needs (GFN) of the State over the last 10 years have doubled “generating imbalances that threaten sustainability.” Thus, these gross financing needs as a percentage of GDP (including the public sector), went from 10% in 2010 to 20% this year. And they will be 18% in 2023.

It also highlights part of the official discourse on the “Objectives to restore sustainability”: Stabilize Public Debt at sustainable GDP levels, Extend debt maturity terms and Reduce debt interest rates at long-term sustainable rates.

When detailing the means to sustain that sustainability, he mentions

– Extension of terms and grace period: the new debt structure must considerably ease maturities in foreign currency in the short term so that the country can regain a path of sustainable growth.

– Significant decrease in interest rates: reduce debt services in the long term and lower refinancing costs.

– Reduction of capital owed: guarantee solvency.