Economic Reform and Fiscal Tightening Overview
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Executive summary
Liquidity balances at the Treasury remain at historical high levels as a result of higher than anticipated roll over
rates during 1Q19.
The refinancing during 1Q19 of a portion of the stock of LECAPS through instruments that mature beyond 2019
have reduced the required roll over rate to 35% of LECAPS with maturities in 2019.
Roll over rates in USD LETES have been close to 100% in 1Q19; however, as the refinancing has been done
through instruments that mature within 2019, the required roll over rate remains at 46% for the year as a
whole. Financing is fungible, a higher roll over rate in LECAPS would reduce the roll over rate required in LETES.
The combined average roll over rate can be as low as 40%. A 67% average roll over rate would eliminate net
financing needs for 2020 due to higher than anticipated cash balances.
Although the financial program for 2019 does not contemplate any intra-public sector net financing, during
1Q19 certain net amortization payments were made that shall be refinanced through placements during the
rest of the year.
The Treasury has announced its currency conversion program under which the Central Bank will sell USD60
million per day for a total of USD9.6 billion, through daily auctions until late 2019.
The sale of USD by the Treasury is driven by the projection of peso-denominated expenditures and the currency
composition of the anticipated financing. The sale of USD does not impact the financial strength of the
Treasury's position, only the currency composition of its cash balances.
USD-denominated market securities maturing in 2020 represent only 35% of total maturities of bond
instruments for the year.
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