Argentina lives a countdown, because on May 2 you can run out of dollars in reserves of the BCRA if it paid to international organizations. This postponed him from paying in March, and then he was able to do so due to disbursements that the United States blessed, after the appointment of Alberto Fernández and Joe Biden at the White House. With that oxygen he “complied” at the end of March and promised to continue paying in April and May. But the central bank piggy bank is emptying this month.
The Minister of Economy, Sergio Massamanaged to lower the ceiling of available reserves authorized by the IMF by US$2,000 million, as negotiated in Washington DC, blaming the drought -although with inflated projections compared to those of the technicians of Kristalina Georgieva in terms of the reduction of projection of income from primary exports-. Now he checks that his reserve tank would run out if he made the next disbursement, with what they gave him to pay (in other words, not to say that Argentina was in default again a month ago).
The blue dollar slept Wednesday morning at the door of a cave at almost $500 and Thursday morning sitting on the sidewalk, behind the column of a small tree in the street, above $470. It could even be said that the green ticket spent a quarter of a hundred pesos making a triple jump along the athletic track or holding onto a Tarzan vine.
However, the minister showed that he was considering more action alternatives than some of his predecessors, because with the dollar at almost half a thousand pesos he launched state entities to mediate in the bond marketpromoting profit taking. This type of intervention had been criticized by the IMF in January, and it was made conditional on Argentina making minimal use of this resource or not doing so in the last quarter. The result was that they had to cede some US$50 million more in BCRA reserves, which are not left over.
Following its promise to use “all the tools of the State to order” the situation, the Treasury warned the people of the IMF what it would do and that, due to realism with its foreign currency availability, had no choice but to promote the review of the credit program for US$44,000 million signed a year ago, but which at the end of March had rearrangements due to the lowering of the reserve ceiling and acceleration of pending tranches that arrived from the United States.
The key was critical support from Janet YellenBiden’s Treasury Secretary, who sat next to him to speak in the Oval Room from the other side of the table with President Fernández and was commissioned by his boss, who was willing to do it not to save the election year of the current government, but to achieve persuade him not to throw himself into Chinese arms.
Sergio Massa with the Chinese ambassador, Zhou Xiaoli: the minister presented the activation of the final tranche of the swap as a solution to the lack of reserves
After having achieved a temporary impasse in the fight with the blue, Massa’s agenda will focus on the round with businessmen and unions to contain prices for three months before the devaluation and inflationary push. It will be just before the workers’ acts of May 1, to calm down the nearby CGT, and thankful for having that day with the market closed, on the eve of the decisive reopening of Tuesday 2.
The euphemism of the swap with China
Meanwhile, the announcement by the Chinese ambassador in Buenos Aires, Zhou Xiaoli, with the minister, that Argentina will temporarily pay China in yuan for its imports, is a euphemism, as the most pleasant words that do not call things by their most prosaic name are called. From the swap in five tranches with China, Casa Rosada has already spent three tranches, until last month, for US$1,000 million each. We are talking about a credit guaranteed with future energy production in Argentina, in which the Government is pawning out of necessity what it has not yet extracted -as Venezuela did with the results in sight of spending the amount charged for the bear’s skin before having hunted it- .
Buenos Aires raised the urgent request to Beijing for the two sections that remain to be received so that the plummet of the reserves does not accelerate and crash against the surface. However, neither will they be able to pay the organizations with this help before May, undressing one saint to dress another.
It is that the Chinese have it clear. From the ancient Forbidden City of Beijing and Cambaluc in times of Marco Polo, they sent word to Massa – word more, words less, for my lacking Mandarin – that “well, we will disburse the rest of the two tranches, but will not leave China: from there we charge them for pending imports from April and May so they don’t have to use dollars.”
Speaking in silver: US$1,040 million for this month and US$790 million for next month. They do not give the numbers for the Argentine economy to survive in its entirety until July if positive news from the IMF does not arrive beforehand.
While the US is suspicious of China’s rapprochement with the region, Alberto Fernández seeks to secure a share of the BRICS group credit lines with Xi Jinping
Dreaming of the BRICS dollars
There will be more for the 15th annual summit of five presidents of the emerging BRICS, at the end of August in South Africa, thanks to the support of Xi Jinping and Lula, through whom Argentina aspires to sing as the “new kid on the block” (new kid on the block) of which the acronym Brazil, Russia, India, China and South Africa already form.
China’s GDP is greater than that of its other four partners combined. Thirteen more countries applied formally and six informally for scrutiny by the five foreign ministers in Cape Town on June 2-3.
At the same time, under the presidency of former Brazilian president Dilma Rousseff, the new board of the BRICS Bank (BND) met on the 26th in Shanghai, for the first time in person, with portfolios of loans granted since 2015 for US$30,000 million. The interest of the 19 aspiring countries to be another new “bric” holding onto the “Great Wall” (Great Wall paraphrasing Pink Floyd), It would provide Argentina with a new source of financing with capital of US$100,000 million for infrastructure and renewable energy projects.
And speaking of multipolarity, after appealing to the United States, China and Brazil -with the financing of imports for a year in 2023-, any other help at this crucial moment is good. President Alberto Fernandez aspires to premiere its new Tango 1 by flying to Brussels for the Euro-Latin American EU-CELAC summit on July 18 (and a day before with Mercosur). His eyes sparkle at the European Union’s announcement of a global package of US$300 billion for loans and funds to be shared among “reliable partners.”
Carlos Montero Gaguine is an international policy analyst and editor of The Mercosur Economic Synthesis
