In the first quarter of the year, the Salvadoran government must face the maturity of almost $ 850 million in short-term debt (LETES and CETES).
According to estimates based on information from the Ministry of Finance and the El Salvador Stock Exchange, only in January there are five maturity of Treasury Bills (LETES) for an amount of $ 199 million and one of Treasury Certificates (CETES) for $ 150 million .
Later, in February, there are $ 171 million and in March $ 329 million.
In the opinion of Ricardo Castaneda, senior economist at the Central American Institute for Fiscal Studies (ICEFI), 2022 looks like a “complex” year for public finances, since the lack of access to financing windows creates pressure and activates risks.
In principle, there should be no major inconvenience with the payments for this first quarter to do the “rollover”, although the interest rate (which has been fixed at 7.5% since last year) may increase due to the higher risk profile and there will be Stronger refinancing from August, he explains.
It should also be remembered that, last year, several auctions were not placed in full amounts.
The problem, points out Castaneda, will be the issuance of LETES and CETES that are not to pay maturities but to cover the needs of the gap between income and expenses. “There may be a problem of illiquidity for the government,” he adds.
This implies that the public budget has to allocate more and more resources to service the debt; Only this year is the amount greater than the budget for the Ministry of Health in the midst of a pandemic.
It should be noted that in the domestic debt market, last year this financing possibility was greatly exhausted because a lot of money was obtained in CETES and the existing LETES were refinanced.
In total there are about $ 2,400 million issued in domestic debt to date, when the normal in El Salvador has been between $ 800 million and $ 1,000 million.
“Thinking that they will be able to issue something additional this year seems very difficult and just refinancing that money is a headache,” says Luis Membreño, an economic analyst.
Another pending, experts point out, is what the Government will do to refinance its additional deficit in 2022 or move this debt over to the long term.
For this year the panorama of being able to have additional financing in international markets is very complicated due to the high rates and, if there is no agreement with the International Monetary Fund (IMF), the financing doors of multilateral organizations will be restricted.
Membreño explains that a possible refinancing of this short-term debt with multilateral organizations would be ideal and could be reduced by around $ 170 million only in annual interest payments.
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