The super rate increases the cost of public debt by $2.6 trillion and complicates the surplus

The commitment to high interest rates to contain the dollar has plunged the economic team into a maze in which they can find no way out, either to reactivate the economy or to lower the cost of debt.

The super-high rates currently prevailing in the market will have a direct impact on fiscal balance, the area that, along with lower inflation, the government is most committed to protecting.

The consulting firm Equilibra put concrete numbers to the issue. "Today, lending and deposit rates are well above expected inflation (2.2% for August). Real rates in pesos have been hovering around 2% monthly for a month now, levels unseen in recent years, and are extremely harmful even for solvent agents who need access to credit," notes the team led by Martín Rapetti.

Everything indicates that the government will maintain high interest rates to contain the official dollar and inflation until the elections.

Due to the high interest rates, the Treasury had to offer premiums in its peso-denominated debt auctions in order to renew maturities, reabsorb the pesos from the LEFI (Financial Service of Foreign Exchange), and capture excess liquidity—along with increased reserve requirements—from banks.

This led to the monthly effective rate of the shorter LECAP, which averaged 2.7% in June, rising to 3.3% in July and 3.9% so far in August.

All of this translates into higher fiscal costs. Equilibra details that if the fixed-rate instruments awarded in the primary tenders of July 16 and 29, and August 13, are added, the rate increase will entail an additional $1.3 trillion (0.13% of GDP) to be paid between August 2025 and February 2026 (0.1% of GDP in 2025 alone).

"While this amount doesn't appear too large, it will surely increase in upcoming tenders, given that we expect the high rates to remain in place until the legislative elections," says Equilibra.

Thus, according to the consulting firm's calculations, taking into account that by the end of October , $32 trillion of LECAPs held by the private sector and banks alone are due, assuming a rate differential similar to the average of the last tender (1.77% percentage points vs. the rate paid in the first half of July) and a 90% rollover, the financial cost of the rate hike would climb to AR$2.6 trillion (0.27% of GDP).

This amount is similar to the fiscal cost of the Disability Emergency Law , which was vetoed by President Javier Milei but later "reactivated" by the Chamber of Deputies, which rejected the veto. This final step must now be ratified by the Senate.