Never produced so much so little. Record of agricultural exports and empty coffers in the reserves of the Central Bank. A paradox that is also a “multicausal” phenomenon, like inflation already with a floor of 5% per month.
The fateful Monday the 13th the “financial” dollars closed up 13% in a move fueled by the withdrawal of funds from big players in inflation-adjusted mutual funds. The final stitch was given by the State itself by disarming its positions in the Carlos Pellegrini funds (of Banco Nación) to pay for the precious and increasingly expensive shipments of liquefied gas. The country risk again exceeded 2,000 points (that is, 20% per year more than the yield on US Treasury bonds).
Labyrinth. These comings and goings show a very dynamic network of communicating vessels. It is the great restriction that weighs on the autonomy of economic policy decisions: the vulnerability aggravated by the pandemic and an uncertain international context that manifests itself in a chronic fiscal deficit, reserves in their minimum expression and high inflation over a long period of stagnation.
The paradox is that there is an opportunity taken advantage of by foreign trade for a year, with the recovery of the Chinese economy and the rest of the world that absorbs raw materials. Soybeans reached a ceiling of US$650. In the first quarter of the year, the liquidation of agriculture grew to US$15.3 billion, another value never seen before. However, it is difficult for the Government to meet the goal of accumulation of reserves agreed in the agreement with the International Monetary Fund. In the latest consultant’s report Invecqwarns that although at the end of the month they will enter US$4,000 million from the IMF and a total of close to US$2,700 million will have to be paid, it will be utopian to reach the goal of US$6,425 million for the first semester.
In the opinion of Maria Castiglioni, director of C&T Economic Advisors the BCRA this has to do with the factors that support the demand for foreign exchange: 1) import demand; 2) energy purchases; 3) reopening of international tourism and 4) movement of capital. “Everything that involves making foreign currency remains firm, that is why the Government cannot increase reserves. It is not a problem of the world but of Argentina and it has to do with the expectation that there may be a jump in the exchange rate and the inflation that discourages the demand for pesos”, he explains.
The delay in the exchange rate (in 2021 it was 20% against inflation) puts pressure on imports, anticipating an eventual correction that never ends. But to stop them even more with the tangle of controls and traps is to stop the economic activity in recovery. Another component is the import of fuel and gas, catapulted by the rise in the international market. The tourism factor, which was a stable component in the demand for dollars, is already showing surprising vitality with the reopening of flights. Finally, attempts are made to control capital movements through regulations, but the balance remains negative: installing a trap prevents exit, but closes entry.
“In short, the underlying problem is a lack of trust. As long as there are tools to make shares, the demand will continue to exist. ”, concludes C.It is not a problem of the world but of Argentina and it has to do with the expectations of an exchange rate jump at the same time that the very high inflation discourages the demand for pesosastiglioni.
Shipments. Sustained prices invite us to review whether we are facing a peak or if it is a trend that is here to stay. For roman dantemanager of Market Analysis of the consultancy F&O, the Russian invasion of Ukraine generated a sharp rise in corn, wheat and sunflower, “but now prices stabilized one step below the ceilings, when they began to talk about the possibility of shipments for humanitarian reasons, but we have to see this in the future, since hostilities persist,” he clarifies. These prices will allow a sowing with expectation, “But sales levels are low and the market is finding ceilings,” he says. In addition, he warns that the rise in inflation worldwide is a bullish factor for grains, but the expected reaction of the rate hike by the Federal Reserve can be lethal for prices..
Another factor that the agro-export complex looks at with suspicion is the increase in internal costs that undermines the jump in profitability and turns the so-called “unexpected rent” of Minister Guzman. In particular, there are doubts about the impact of diesel on freight, especially for corn over long distances (more than 300 kilometers to the port), with the increase in commercial spending and, therefore, the reduction of the final result. However, Romano anticipates that the strongest implications will be in marketing patterns: “we could see fewer shipments of grain to the port, more bagging at origin and deliveries in stockpiles or local consumption.” Yet another uncertainty to note in this puzzle.
Numbers. Inflation and monetary imbalance end up closing this circle. For the former Minister of Economy Hernán Lacunza, the fiscal gap widened this year, with expenses growing 13% above inflation and revenues at a modest 2%, which means a divergent gap and origin of future debt. the consultant EcoGo points to the peso market in financing the deficit: Of the total Treasury debt of $10 trillion (estimated at 14% of GDP), $4.6 trillion is in private hands. This month no less than $605,000 million are due and from July to December, additional funds will be needed to finance the deficit and renewals for 4.3% of GDP.
For Jorge Vasconceloschief economist at IERAL These factors began to slow down the trajectory of the GDP until turning the recovery into a stagnation and even into a slight decline for the second quarter (-1%) in relation to the January-March period. “The inflationary acceleration that manifested itself strongly as of March is one of the main determinants, but restrictions on the supply side have also begun to affect, due to the lack of imported inputs and parts and due to energy supply problems “, details. It is that the Government lacks the tools to allow a rebound in the level of activity: credit to the private sector competes with the placement of bills by the Central Bank and the continuity of an expansive fiscal policy, “instead of leading to increases in the aggregate demand ends up accelerating inflation and the velocity of money circulation”, he concludes. “The “stop and go” cycle that characterized the Argentine economy in the last decade, now it is not counted by years, but by quarters”, he concludes. Short-termism is already state policy.
