The judicial presentation of the PRO
Amparo once morest DNU 163 and 164/2023
Public debt arguments
I. The debt swap promoted by the Ministry of Economy, which forces public organizations to pesify their debt holdings in dollars, is objectively and factually ruinous.
II. The mere announcement of the exchange leaves us on the verge of default (default). This is reported by Fitch Ratings, one of the most important risk rating agencies on Wall Street, who decided to lower the rating of Argentine bonds, taking them from “CCC-” to “C”, following the measure was announced. This is one of the lowest scores on its risk measurement scale, representing a drop of 5 subcategories (we went down from “CCC-“, through “CC+”, “CC”, “CC-“, “C+”, to the note “C”).
III. The “C” rating, in Fitch’s words, reflects the unilateral condition of the swap and its compulsory currency conversion (from USD to ARS), two issues that constitute, according to its technical criteria, a default scenario.
IV. The report also warns that, at the time of executing the swap, the rating will inexorably drop to “RD” (restricted default, that is, a partial default).
V. Public sector debt holders must exchange their “foreign law USD bonds -New York-” (USD 4,000 million according to the authorities) for national law USD bonds that will be settled in ARS. One only has to compare the price of equivalent bonds (same conditions) with both legislations to verify the damage that this change entails.
SAW. In addition, since the decrees do not specify that the foreign law bonds that enter the Treasury will be reabsorbed, strictly speaking we are dealing with a “new indebtedness” disguised as an “exchange” (Federico Pinedo’s argument).
VII. In addition, public organizations are required to part with the “USD bonds of national law”, to allocate 70% of the proceeds to the purchase of bonds in ARS and the remaining 30% remain at the “free disposal” of the organizations. public to cover expenses. Is there no capital loss in this case used for current expenses? Is it going to be used for electoral purposes?
VIII. Massa’s announcement enhances a context where the country risk exceeded the barrier of 2,500 basis points.
Arguments related to the affectation of the FGS and retirements
I. The Sustainability Guarantee Fund (FGS) law places limits on the PEN in relation to its operation, financing and administration. This is completely blurred with DNU 164/23, as it allows managing and delivering FGS assets without the necessary controls established by laws 24,241 and 26,425 (providing for the Integrated Retirement System).
II. Law 27,574 sought to “armorize the assets of the FGS” (created by the current Government), by providing that the assets be used for the payment of the Argentine pension system. Reference was never made in its articles to the referral of contributions to another ministry or investment that was not safe. The DNU fails to acknowledge this law and affects the FGS for payment and investment in matters unrelated to the pension system, leaving future and current retirements in a state of vulnerability.
III. The risk of falling into underfunding of the FGS, as a result of its bad investment, will occur as long as the dividends that must be generated in accordance with the law are not guaranteed (this will result in irreparable damage). The legal mandate that provides for it is precise: it can only be invested if the result is favorable or has little chance of being unfavorable.
IV. The control mechanisms that are the Board of Directors and the Bicameral Commission of Congress, who must approve this transfer of the FGS outside its scope of application, are going to fail. This is not happening with the two DNU and it is the Director of the Anses who is responsible for taking the initiative to resort to the aforementioned control agencies.
V. Raverta must comply with the function of safeguarding the current and future interest of the FGS, and its complicity in the delivery and definancing may generate its responsibility for the breach of its duty as a public official, due to the aforementioned.
News in development…
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