The Ministry of Economy approved, through Resolution No. 1,643/2023, published in the Official Gazette on November 16, 2023, the “Sustainable Sovereign Financing Framework” (the “Framework”), which establishes the criteria for the issuance of green, social and/or sustainable sovereign bonds and/or loans, both in local and international debt markets.
The Framework, on the one hand, establishes Argentina’s priorities in environmental and social matters, thus defining the type of programs that can be financed by this type of instruments.
In environmental matters, it is planned to finance programs related to the following environmental categories:
- Sustainable use and management of water resources;
- Conservation of ecological systems and biodiversity;
- Energy efficiency;
- Renewable energies;
- Sustainable forest management;
- Sustainable Mobility;
- Sustainable agricultural production.
In social matters, the Framework aims to finance programs tending to reverse the following problems:
- Access, quality, permanence and completion in the educational system;
- Access to affordable housing and basic infrastructure;
- Access to a comprehensive and quality health system;
- Generation and promotion of employment and development of regional economies;
- Socioeconomic advancement and empowerment of vulnerable and minority groups;
- Promotion of gender equality and diversity;
- Sustainable food security.
On the other hand, the Framework is aligned with the Green Bond Principles 2021 (GBP), Social Bond Principles 2021 (SBP), and the Sustainable Bond Guidelines (SBG), established by the International Capital Markets Association (ICMA). Additionally, it is aligned with the Green Lending Principles 2021 (GLP) and the Social Lending Principles 2021 (SLP), established by the Loan Market Association (LMA), Lending and Trade Loans Association (LSTA) and Asia-Pacific Loan Market Association (APLMA).
The Framework includes four components:
- Use of Funds:the net proceeds from the green, social and/or sustainable bonds or loans of the Government of Argentina will be used to finance, in part or in full, new or existing programs that correspond to one of the eligible environmental and/or social categories, or refinance them to the extent that they have had disbursements in the last 12 months prior to the date of issuance of the thematic instrument.
- Project Selection and Evaluation Process:the evaluation and selection process of eligible projects for thematic financing instruments will be carried out by an Evaluation and Selection Committee (the “Committee”, CES) defined and formed within the Ministry of Economy of the Nation (MECON), created through Resolution 1529/2023.
- Fund Management: the monitoring of the resources raised by the thematic instrument will be the responsibility of the national Ministry of Economy, guaranteeing the financing of new or existing eligible environmental and/or social projects, as defined in the Framework. The allocation of funds will be verified by an external auditor until the instrument is fully allocated and will be reported in the annual report. The traceability of resources will be guaranteed by the Ministry of Finance.
- Report: for each labeled bond issuance, the Ministry of Economy will prepare two reports: (1) a fund allocation report and (2) an impact report, to show the environmental and social benefits of the eligible programs financed or refinanced. Both will be published annually on the Ministry’s website since the debt instrument is issued and until the resources of each instrument have been fully allocated, in the first case, and until the instrument has fully matured, in the second.
