The presumption of inclement weather in 2023 was confirmed: according to data from the Rosario Stock Exchange, Exports from the agroindustrial sector reached US$19,742 million, US$20,700 million less than in 2022 (-51%) and remaining the negative record since the other great drought, in 2009.
The firm. The data would be enough to explain the great delay of the Argentine economy in recent times: the chronic shortage of dollars shown in the abrupt fall of reserves, a data that deserves many interpretations depending on the items considered but that the estimation of several economists also dyes red for the last December. That is to say, the net reserves (not the gross ones, which are the ones that the Central Bank always insisted on making known and hiding the relevant ones, the ones net of debts and illiquid assets) are still in negative magnitude in a figure that would be higher than the US $10,000 million. An alarming figure if one considers that the most sensitive item, dollar deposits in Argentine banks, amounted to US$14 billion, according to official information from the Central Bank. The year started with a stock of gross reserves of US$23,073 million, marking an abrupt drop compared to the first day of 2023: -US$21.6 billion.
As part of this blow below the waterline, the way of financing was basically through the only line of credit enabled: the one that the importers contracted with their parent companies and usual suppliers when they were induced or forced, according to the case, to extend payment terms by more than 180 days. In this way, according to calculations by the economist Salvador Vitelli, Head of Research Romano Group, the usual stock of debt increased from US$29.3 billion to US$63.2 billion, with US$50.05 billion corresponding to imports of goods and US$13.15 billion from services. In a single month, in November, for example, it was imported for US$5.49 billion and only US$1.67 billion was paid. This implies that the collapse of the exportable balance of the Argentine economy last year was more than compensated by the increase in the debt of importers and the fall in reserves.
Always the dollar. The reference point remains, then, the official exchange rate, which had been running behind inflation, had a rise of 109% in the first eleven months of 2023 while the CPI accelerated to 148%. A clearly electoral measure because, as demonstrated in the two exchange rate corrections (the one on August 14, after the PASO, and those on December 12, the inflationary “anchors” slowed down the price race, but also forced its distortion. What happened with fuel during the last four weeks, in which the value at the pump rose between 110% and 120%, had an inflationary effect on the rest of the production chain. Private estimates of the CPI in December range from 23% to 28%, a notable dispersion in these measurements since many were concentrated in the last days of the month and that will surely be corrected as they flatten out. the highlights. The consulting firm Invecq, for example, measured an increase of 33.6% for food in general, but 36% for sugar derivatives and no less than 43% for the meat category..
In any case, the frenetic rise in food in the first impulse due to the 120% exchange rate jump, would be accompanied, in addition to the already mentioned increase in fuel, by public service rates, the other great burden chosen to camouflage past inflation and private services, such as prepaid medicine, telecommunications and freight transportation. During January, public hearings will begin to be held to unravel and clarify the value of the productive chain of the electricity and gas sectors, with some requests for recomposition that up to four times last year’s values. Without going to that extreme, the increase in the price of public transport in the AMBA in force as of January is the precedent of a general rebalancing that will begin with indexation by the CPI as of February: It could be said that at least the delay in the rate for more than 45% of the country’s population will not continue to be delayed, but the pending bill to close the gap between the cost and value of the service, which today reaches 85%, will continue. in some cases.
To future. In light of the inflationary dynamics, last month’s devaluation and the promise to adjust the exchange rate at a rate of 2% per month can be interpreted as an attempt to provoke a greater liquidation of exports since with each passing day the real value of the operation is deteriorating. For the consultant Alfredo Romanoat some point they will have to touch the official exchange rate again because that 2% “To anchor inflation it seems to me that it is not going to work, the gap is going to start to widen again and starting in March when exporters have to start liquidating the thick harvest, there would be a slightly higher exchange rate”, he projects. That is why he believes that the next step will be to accelerate the devaluation rate or take a further leap to reach the objective of exchange rate unification.
For its part, Marcelo Elizondoowner of the consultancy IDis betting that the improvement in exports by overcoming the drought could be close to the excellent 2022 campaign and very close to the 2020 record, with some US$85 billion of shipments in total. ““This will generate a very large trade surplus because imports in the first semester will still be weakened because despite the deregulatory discourse, access to official dollars is contained in a schedule that will be eased depending on the entry of dollars to the Central Bank.”, clarifies. Furthermore, he adds that the recession, the relative increase in import prices and a better energy balance due to the launch of the gas pipeline will also limit the drain of foreign currency and will generate a cushion of US$15,000 million, water in the desert for the exhausted coffers of the Central Bank. His estimate is that in the second part of the year we can begin to release the stocks and have a market exchange rate with intervention from the Central Bank (“dirty float”), to which the recomposition could be added by reviewing the agreement with the IMF that could even bring about an injection of additional funds. Step by Step…
The arm wrestling. Romano is also optimistic about the outcome of the agricultural campaign based on the high international prices that still support the value of exports. A necessary condition to think that a recovery of external balance is not utopian, but neither is it a magical issue. Elizondo, for example, insists that the first thing is to recover macroeconomic fundamentals. “Put order in the reserves in the Central Bank, organize all contingent obligations – importers’ debt -, new agreement with the Fund, Leliqs, intra-public sector debts, at least to provide a framework of predictability and financial sustainability,” underlines. Of course, it also adds an old desire without which it is impossible to repair the course: the need for a balanced budget that allows, in exchange terms, to reduce monetary emission, to achieve a much more predictable, sustainable and calm exchange rate in the extent to which the cause of the depreciation, which is the monetary issue, can be eliminated. Almost a government program in itself.
Until further notice, the fight between exchange rate expectations and inflationary dynamics will be a race against the clock. As prices rise, pressures grow for wage recomposition through joint ventures and the updating of pensions, which are increasingly flattened around the minimum value. The time in which the Government aspires to crystallize reforms that effectively impact the pocketbook.
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