Is it true that nothing happened? | OPINION

In the last three years, more than S/87 million left the pension funds in six withdrawals approved by Congress and the Executive. Undoubtedly, at the worst moment of the pandemic, allowing these exits sought to alleviate the emergency or unemployment situation that many Peruvians were experiencing. But as we went back to normality, the approval of a fourth, fifth or sixth withdrawal was missing the point, benefiting those who were not necessarily vulnerable. On the side of affiliates, the unfortunate balance is that today more than 2 million do not have a single sun in their pension fund.

To meet the withdrawals, the Central Reserve Bank took a leading role supporting with repos, which are loans to pension funds guaranteed with sovereign bonds. The result has generated two sides of the same coin. In one, there was diligent work on orderly bond sales to keep rates from skyrocketing. But in the other, it was generated that many believe the story that, after the withdrawals of funds from the AFPs, “nothing happened.” The effects have been profound and we have felt them all in our pockets.

Based on a presentation by Macroconsult, with public information, the x-ray of the first semester is as follows: the universe of funds available in the capital market has fallen by around S/24,000 million in the last twelve months. At the same time, deposits in the financial system have hardly moved since 2020, totaling between S/400 billion and S/410 billion, while mutual funds have lost almost half of their assets.

Regarding corporate bonds, we went from a market that issued S/4,000 million annually in 2019, to only S/179 million in 2022. In that same period, short-term paper went from S/2,300 million to S /2,500 million. This change does not compensate for the lack of bond issues, which puts bank lines under stress and reduces the average term of the debt. Today companies are forced to borrow from banks for projects that they previously financed in the long term in the market.

On the other hand, foreign investors have reduced their participation in sovereign debt from 49% in 2019 to 41% in 2022. Thus, Peru’s debt in soles went from 76% of the total to 56% in just two years. With the last debt management exercise of the MEF, which has been a complete success, we moved to a mix closer to 60%/40%, granting concessions in the rate and with a political scenario that was turbulent, but more stable compared to the beginning. of the year.

How does all this affect our pockets? The answer is simple, but complex at the same time. Given the lack of financing at competitive and long-term rates, companies find themselves in need of resorting to lines of credit with the banks that they used to use for working capital, inventories, among others. It is important to understand that, due to its magnitude, an expansion of facilities or a new machine cannot be financed in the short term, because the stress on cash flow would be very high, potentially sending the investment project to the file.

In this context, if the State does not find demand from investors for its papers, the base rates against which everything is priced in soles is raised. An example is what happens today with mortgage, personal and vehicle loans. Credit becomes more expensive for everyone. The question returns: is it true that nothing happened? The evidence shows us otherwise.

Generating liquidity to face withdrawals is not like going to a vault and loading trucks with bills, the money is invested in the capital market with a long-term horizon. On a day-to-day basis, there is normally not enough liquidity to repay the outgoing volume that was generated during the six withdrawals approved since the pandemic.

As a consequence of this, today the investments of pension funds are concentrated in illiquid instruments and in Peru, a situation that goes against the current of the ideal diversification that pension funds should have. This caused them to move away from what we want to offer and temporarily became what we have been able to manage given the need to generate liquidity and not fail our millions of affiliates. While that balance is readjusted, and in the midst of a reform context, if we want a pension system that works optimally, it is time to make consensual decisions that put the main character at the center: the affiliate.