Since October, when the Import System of the Argentine Republic was established, the situation of consumers and the national industry has been seriously affected, but it has also had consequences on exports. The level of net international reserves is decreasing, and the international financial situation will have consequences on different levels.
February, according to INDEC data, showed a slight improvement with respect to the trade surplus but the two-month period closed with a negative balance. The drought problem will deepen during the second quarter. “The Rosario Stock Exchange estimates losses of around USD 19 billion, which will severely affect net international reserves” Explains Lic. Lojo and adds “The INDEC showed that there was a strong contraction in the value of exported goods, and this is likely to be accentuated. Because? A strong dollar is inversely related to the price of commodities, causing them to fall and the international financial crisis will enhance the situation. Investors will turn to the safest assets relegating foreign trade.”
Many industrial companies, due to the difficulties they have in accessing imported inputs, are reporting problems in supplying the local market, and at the same time, this ends up impacting their possibilities to sell abroad. The situation mainly affects SMEs, from a wide range of sectors, and although mechanisms have been implemented to facilitate access to dollars for production processes, they are not easy to apply.
Beyond the fact that obtaining local financing is difficult for any small or medium-sized company, the financial crisis makes it more difficult to finance operations. In a context of so much instability, which supplier will accept to send merchandise to a firm in Argentina without payment?
“Suppose that a company today places a purchase order because it obtained the approval of its SIRA with a payment term of 90 days from the date of nationalization. Estimating the production process and international logistics, we would be talking that with luck you could nationalize in June and pay in September. How do you define the price for a good that you will receive in June, but would have to pay in September without knowing what the official dollar value will be at that time?” Explains Lic. Lojo
The scenario is not looking to improve, the situation of the reserves and the scarcity of dollars suggest that there will be fewer and fewer companies that can access the official market to pay abroad.
Lic. Yanina S. Lojo
mg. in Finance Management
www.consultoralojo.com
@mg.yaninaslojo
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by CEDOC