Dollars continue to flow from the Central Bank / Archive
The Central Bank has continued to lose reserves since the beginning of 2023. Yesterday it ended once again as a seller, after attending the wheel with US$66 million on the exchange market. In this way, it accumulates a detachment of reserves for US$307 million in 6 days, with its interventions in the exchange market to keep the rate of devaluation of the peso under control. Since mid-January, when a streak of buying dollars ended, it has resigned US$845 million.
All this despite the fact that the Government was able to meet the goal of reducing the deficit committed to the International Monetary Fund. Thus, the Ministry of Economy began the electoral year with public spending “at bay”: the rate of expenditures fell in January compared to the same month last year. On the horizon, in addition to the elections, which are looming as an instance that usually forces an expansion of spending, a new goal also appears with the IMF, which implies an even greater pruning of the fiscal red.
The loss of reserves alerts the financial market, at times of low export settlements from the countryside to supply the genuine demand for dollars and maintain a delicate balance in the exchange market.
“Gross reserves continue to drop due to the aforementioned sales, recent payments to the IMF and the repurchase of ‘hard dollar’ bonds. Gross reserves (…) are on track to break the US$ 40,000 million in the next few days if the selling trend persists”, said the consultancy Delphos Investment.
SOY DOLLAR III
In addition, he added that “in this way the difficulties for meeting the net reserves goal for March continue to increase. In this context, the Government will need additional measures -another additional ‘soybean’ dollar, a REPO loan, etc- to compensate for the fall in reserves during the summer”.
But, to keep the accounts in order, 2022 was a year in which the Executive Power needed to speed up a cut in spending from the second semester -in addition to other fiscal measures- to cut with an inertia of expansion of expenditures during the first quarter that had jeopardized compliance with the deficit target agreed with the IMF.
While the first half of the year ended with growth in real terms of primary spending of 12.5% compared to the same stretch of the previous year, in the second half the effect was the opposite and ended with a strong cut of 19.5 % real, according to the Infobae portal.
But early sell-offs by soybean growers in the latter part of 2022 in the face of a differential dollar and severe drought affecting crop forecasts continue to complicate the flow of foreign currency.
GOALS
Our country has the largest active program with the IMF with a plan of extended facilities for some US$ 4,000 million at the time it was announced, in March 2022. The plan, which includes quarterly reviews, aims to increase reserves in that amount this year.
The soybean harvest, which in 2022 amounted to 43.3 million tons, will be less than 35 million tons and in the case of corn, which in 2022 was 51.1 million tons, would be less than to 42 million tons.
This would imply that some U$S 8,000 million less exports, less reserves, tax revenues and recalculating the budget could enter the country.
Within this framework, the perception is also strengthened that the net reserves appear insufficient to meet the goal set with the IMF for the first quarter -it contemplates accumulating US$500 million and thus reach an amount of US$7.700 million- and that It will be necessary in the short term for the Government to take more measures to avoid having to request a waiver (forgiveness) from the international organization.
