Milei Effect: the Treasury and Bcra Debt Fell by More Than Usd 29 Billion

Since Javier Milei's inauguration, the consolidated debt between the Treasury and the Central Bank has been reduced by USD 29.065 billion, according to official data.

This decrease comes after the process of accounting normalization and regularization, which allowed for a more accurate reflection of the State's liabilities, without implying a real increase in debt.

The reduction of debt and its impact on the economy

Although the gross debt of the National Treasury amounts to 89% of GDP, its consolidation with the Central Bank reduces it to 62%, and if the assets of the Sustainability Guarantee Fund (FGS) of Anses are included, the figure drops even further to 51% of GDP.

The Government achieved this result after recording a primary surplus of 2.1% of GDP and a financial surplus of 0.4% of GDP in 2024.

The Minister of Economy, Luis Caputo, highlighted that in January the State obtained a primary surplus of $2.434.865 billion and a financial surplus close to $600.000 billion, showing an orderly fiscal administration without the need for new taxes or tariffs.

Key factors in the reduction of debt

The consulting firm Quantum Finanzas pointed out to Infobae that the decrease in consolidated debt is due to several factors:

• Regularization of pre-existing liabilities: no new debt was caused, but previous commitments were made transparent.
• Transfer of liabilities from the Central Bank to the Treasury: remunerated liabilities in pesos of the BCRA were eliminated for the equivalent of USD 65.832 billion, while those denominated in dollars grew only USD 5.615 billion, mainly due to the issuance of BOPREAL.
• Change in interest accounting: the interests of LECAPs, BONCAPs, and LEFIs were capitalized, postponing payment without increasing the economic burden.
• Exchange rate evolution: the effect of the official dollar on the conversion of liabilities in pesos affected the dollar measurement of the debt.

Currently, the consolidated debt between the Treasury and the BCRA stands at USD 325.519 billion (62.3% of GDP). If the holdings of the FGS are included, the figure is reduced to USD 266.002 billion (50.9% of GDP).

Comparison with other countries in the region

At the regional level, Argentina shows a level of debt that, although high, is significantly reduced when consolidated:

• Brazil: 89% of GDP, including debt of the Treasury, provincial and municipal governments.
• Colombia, Mexico, and Uruguay: 56-65% of GDP.

The main difference lies in the composition of the debt:

• Argentina: 59% of the debt is in foreign currency.
• Brazil: only 6% is in dollars.
• Chile: 15% in foreign currency.

This reflects a greater dependence on external financing in Argentina, which exposes the country to exchange rate movements.

Risks and future challenges

Quantum Finanzas warns that the holdings of the FGS in Treasury securities (USD 57.517 billion, equivalent to 11% of GDP) could become immediate debt with third parties if they were sold on the market.

Regarding international commitments, although Argentina doesn't face capital maturities with the IMF until 2026, it will have to pay USD 2.600 billion in interest, in addition to another USD 3.202 billion to other international creditors.

Perspectives and sustainability of the debt

The regularization of the pre-existing debt and the consolidation of liabilities represent progress in the normalization of public accounts.

However, fiscal and monetary policy will play a key role in reducing exposure to external financing and stabilizing the debt profile in the medium term.