The Government changed its mind again and President Alberto Fernández announced that he will abide by the precautionary measure issued by the Supreme Court of Justice, after having shown himself in a more confrontational and almost intransigent position just a few days ago.
The ruling will be complied with, but the national government will pay the City of Buenos Aires through TX31 bonds. It is a financial instrument adjusted by the Reference Stabilization Coefficient (CER), and maturing in November 2031.
Fernández determined that the payment with bonds will correspond to the 90 days of validity of the precautionary measure of the Court, until a final decision is determined or a law of Congress that determines the allocation of the co-participation resources.
The Kirchner government reintroduces quasi-currencies as a means of payment for the Provinces, a fact that has not been seen since the crisis of 2001. Payment with TX31 bonds is a maneuver similar to the issuance of LECOP bonds (Letters of cancellation of provincial obligations) that were established between 2001 and 2002 to transfer resources to the Provinces.
The Argentine economy goes back in time and recovers old practices that were believed to be outdated. As President Fernández himself admits in his series of tweets about paying with bonds, the use of quasi-currencies to pay obligations has already been used for the Province of Santa Fe.
For this particular case, the Supreme Court accepted the use of quasi-currencies to cancel the debt of the national government with Santa Fe, with which the ruling party hopes that the same operation will be accepted for the deal with the City of Buenos Aires.
The Government of the City of Buenos Aires and the 3 million people who inhabit the jurisdiction will be directly affected by the measures of Alberto Fernández. The mere disarmament of the bonds to pesos to be able to carry out the budgetary obligations, leads to a loss of between 30% and up to 40% of the total resources that by law correspond to the City.
In practice, the Government issues a quasi-money that virtually liquefies a substantial part of the true obligation that it had to pay. The response from the Head of Government Horacio Rodríguez Larreta regarding the payment with quasi-coins is still awaited.
With information from La Derecha Diario