In less than four months, Nayib Bukele’s government has already added $ 604 million of short-term debt, through treasury bills (Letes), following yesterday’s placement of $ 46.3 million.
The Executive claimed they would lend him $ 107,220,700 in the stock market, but at the end of the day, he made $ 46,300,100, according to information posted on the El Salvador Stock Exchange portal.
This loan, which must be repaid within 360 days, has been placed at a rate of 7.3%.
This latest placement is in addition to the placement already made in the first three months of the year and amounted to $ 557.7 million.
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Between March 2 and March 25, the Treasury had made four deposits of Letes and another of Treasury Certificates (Cetes) for a total amount of $ 388,346,000, according to stock exchange data.
In total, the government made eight placements between January and March, keeping short-term debt level as the legislative assembly has allowed Bukele’s government a short-term debt limit for this year on current income in 2021.
This kind of debt through Letes and Cetes does not require approval from the Legislative Assembly and is comparable to a government credit card, capped at $ 1,424,126,968 million for 2021.
For this reason, the government has had to pay in installments to repay the loans. For example, on March 23, the government lent $ 115 million and made a payment of $ 125 million the day before; on March 24, he repaid an additional $ 125 million and on March 25, he borrowed $ 136 million.
In terms of public finances, last month was one of the most critical in the first quarter of the year as it had to pay $ 328 million. And while he only has to pay $ 46 million this month, he has already borrowed $ 46.3 million this Tuesday in Letes.
The third quarter of this year will see another difficult month for the treasury, as the Treasury has to pay $ 94 million in Letes in September and also pay $ 645.8 million to Cetes on loan on September 21, 2020.
Little margin to lend
According to data from the Central Reserve Bank (BCR), the government is building up $ 1,323.70 million in debt in Letes until February this year.
This amount implies a 26.08% increase in short-term debt, as Treasury debt stood at $ 1,049.86 million in February 2020.
Due to the debt burden in terms of one year, the government has little room to take out more loans. In fact, yesterday’s placement reflects that they didn’t agree in the stock market to lend him everything the executive needed.
In total, the Treasury is due this year to pay $ 1,724.5 million in Treasury Bills and Treasury Bills that have different maturities this year.