There are multiple possible combinations. But reality is tyrannical and indicates that, a few days before the start of the crucial second semester of this electoral year, international reserves continue to be negative. It is the context to explain the reason for so many tours led by the Minister of Economy or officials of his team to try to obtain what the climatic adversity and the obstinacy in designing an exchange scheme with a strong anti-accumulation of reserves bias gender. Anything goes when it comes to avoiding or at least postponing the final sentence: there is no more!
in search. Sergio Massa it tries to make up the situation, but the limit with which Argentine economic policy has traditionally found itself emerged strongly this year. The trigger was the drought, with which meteorological hazard capped three years of attack by the La Niña current, with a decrease of between US$20,000 million and US$22,000 million for the entire year. The final account will depend on three factors: 1) that the corn campaign and the beginning of the wheat cycle manage to reverse the dismal harvests of the present; 2) that the climate in turn gives a mild winter and thus reduce gas imports; and 3) that the lower economic activity stops putting pressure on the demand for dollars for inputs.
The end result of this polynomial formula is plagued with unknowns. But there are indications that the scarcity is beginning to guide the decisions of the economic team with two very different separate paths. On the one hand, trying to adjust another round to the import stocks, a hallmark of this government that made a virtue of necessity. Although the exchange rate gap operated to increase the demand for dollars to pay for goods and services abroad, its persistence and the prospects for devaluation as the level of reserves falls generated distortions that made it difficult to supply inputs.
Another chapter in this saga was shown this week when air transport companies made visible their demand for dollars to pay the rental of their aircraft. In this industry, the usual with long-term rental contracts (leasing) of aircraft with large specialized companies, so any delay in payments as well as insurance and technical service, condemn the planes to remain on the ground . This is simply the beginning of a series of contingencies that many sectors will have to face during this year of “drought” for currencies. At least until the agricultural cycle starts again and the normal flow of dollars is restored.
The balance. roman danteMarket Manager FyO and a professor at the , highlights that, as the response channels for soybeans to increase exports this year are exhausted, he does not rule out another export encouragement program, but in this case with corn. “There is very little soybean left, we have toFaculty of Agribusiness of the Austral Universityue to pay rents and maintain some reserve. If it was not operated at the moment, it seems difficult for more business to be generated”, he warns. Instead, he expresses that many producers are convinced that a corn dollar is coming, but he considers that they must be careful about the impact on the meat market. “The corn is very late in the commercialization, and this generated rumors that a corn dollar could come.
Marcelo Elizondodirector of ID Consultants, distinguishes that the yuan swap operation carries an interest rate of slightly more than 6% per year, a little higher than what the IMF charges for regular loans, but cheaper than what must be paid in services with irregularity. “China lends it to you, obviously, to pay for imports to its companies from its country. Until now we had for US$5,000 million and now the margin is extended to US$10,000, but only less than US$1,500 million were used and, for some reason, they are not releasing everything that is authorized“, Explain. Thus, the green light to finance these imports and thus free up dollars to pay for them (the ultimate purpose of the Tetris move with which Massa sought to crown his recent trip) continues to depend on the authorizations to complete the first authorized quota and then the new one. agreed. It is probable that, in addition to the rapid authorization of two importing companies with plants in Tierra del Fuego (Newsan and Mirgor), two “experts in regulated markets” and with solid political ties, the rest will follow a more prudent path. The Argentine history of evaporating financial aid and the impulse to transfer the problem to the next administration slow down these operations.. The issue is not minor since the eastern country has become the main source of Argentine imports (US$17.5 billion by 2022) and any currency exchange is pure profit. On account of increasing the debt that whoever takes this new “hot potato” will have to settle in some way. The success of this effort would add to the amount of financial delays due to imports in general, which Elizondo estimates will reach US$15 billion by the end of the year.
Other sources. Meanwhile, with the other big supplier of goods, Brazil ($12.5 billion by 2022), negotiations met with big promises and few concrete results. Faced with the statutory obstacles of its central bank, the request was direct: that there be financing from state organizations for exporters of products to Argentina, also not to use the North American currency in said commercial flow, and a rare warning in the BCRA accounts. From this difficulty also arose the alternative of resorting to the bank of the BRICS (Brazil, Russia, India, China and South Africa) chaired by former president Dilma Roussef, but which would force Argentina to associate first (and contribute its share of capital) to ask later. And that also implies time (at least two months), the other resource that the Government does not have to avoid an exchange disclosure.
And finally, there is the last resort that often ends up being the first: the IMF. Until now, the entity has been financing the disbursements that the Government itself has been making, with the logical mismatches of weeks, a luxury that can even complicate now. The additional request came for an advance of said disbursements that the Fund had to make until the end of the year. The objective was to “strengthen the reserves” but in reality it is none other than to be able to continue to control the financial dollar market and that the exchange rate gap does not skyrocket. The other negotiation is to request that the quarterly targets be made more flexible (even more), given that the accumulation of reserves was a failure and the fiscal deficit indicators will become more complicated with rising inflation.
Sebastian Menescaldiassociate director of the consultancy eco go, the use of yuan has an additional advantage for importers because payment can be made after 90 days and not the 180 indicated by the Argentine system for the rest. In addition, he sees the use of this instrument as positive because the cost is actually the rate applied to what is actually used, but, above all, because the risk is reduced. “Outside of trade, formalizing the exchange of currencies to the dollar is very difficult, but in this way you are ‘rinsing’ reserves, there is the possibility of using the quota, but it is also a sign that the minimum currency liquidity is not available in the Central Bank. Meanwhile, they are financing themselves with the reserve requirements of the deposits, ”he adds.
The estimation of liquid reserves includes reserve requirements for dollar deposits, the last bulwark of the system. Salvador VitelliHead of Research at roman group, calculates them at US$15,600 million, of which slightly less than US$11,000 million are protected in the Central Bank as reserve requirements. “Money is fungible and does not appear as a problem for the system because it is very solid. But who takes care of them is the Central Bank. To the extent that net reserves continue to be negative, it will be a problem and it is exacerbated if we add the future return of the swaps. People’s deposits are, ultimately, the variable that the BCRA cannot use”, he concludes. Too many questions for a pivotal year in the Argentine economy. One more to continue the tradition.
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