The Ministry of Finance and Public Credit (SHCP) could remain, the following year, without the remainder of Banco de México’s operation (Banxico) given the appreciation of the peso against the dollar in recent weeks.
“The peso has been appreciating due to the rally in the markets, so we are not sure that we will even receive a remainder,” José de Luna Martínez, head of the Treasury Public Credit Unit.
The official explained that the Treasury did not take into account the income, which could be obtained by the remainder of Banxico, for its Annual Financing Plan for 2021.
Banxico’s operating balance is made up of those resources from the revaluation of the international reserves and of the income derived from the differences between the interests that the institution charges and pays to financial intermediaries. For example, in the face of a depreciation of the peso against the dollar, assets in foreign currency are revalued and that can generate the remainder.
According to the Banxico Law and the Federal Law on Budget and Fiscal ResponsibilityIf there is a remainder, the central institution must deliver it to the government in April of the following year. The use of these resources will be to strengthen the government’s financial position and guarantee the reduction of public debt.
In this sense, at least 70% must go to repay the public debt, while the remaining 30% can be used for Budgetary Income Stabilization Fund (FEIP) or to increase assets that strengthen the government’s financial position.
In past months, given the depreciation of the peso against the dollar, some analysts pointed out that the central bank could have a remainder of around 500,000 million pesos; however, these figures have been adjusted to the appreciation of the national currency.
They seek to improve debt profile
José de Luna Martínez explained that, the following year, the government seeks to improve the debt profile and liability management will be carried out as long as market conditions are favorable.
“The Treasury will be able to use the tools at its disposal to smooth the maturity profile, improve the efficiency of the debt portfolio or to strengthen the new benchmark issues,” he explained.
He Annual Financing Plan for the following year, it foresees that the public deficit will decrease 0.3 percentage points of the GDP, to settle at 700,000 million pesos.
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