The evident difficulties of the Central Bank in accumulating reserves cause widespread concern not only because of the brake on the different activities but also because of how demanding it looks, at this point, to comply with the goal committed to with the IMF. This occurs in a scenario of record foreign currency income from the liquidation of the agricultural sectorwhich merits an analysis of the reasons why, unlike last year when the BCRA managed to capitalize on the flow of record grain prices, with an accumulation of more than USD 3,000 million, now, after the first four months, there is no managed to retain not even 10% of that figure since it barely raised about USD 200 million.
Both from the Central Bank and from the Ministry of Production they insist that imports registered a strong increase, in part to respond to complaints from the industrial sectors about the limited access to foreign currency in the official market. Both things are true: While the dollars allocated to production are insufficient to sustain the reactivation given the jump in the price of inputs due to logistics costs and bottlenecks in international trade, the trade surplus registered a sharp drop compared to last year.
The Government expects a disbursement in the middle of next month of about USD 4,150 million. With that money, he must pay off a maturity of USD 3.8 billion, which would allow him to save at least some USD 350 million.
The official data of the Indec estimate for the first quarter of 2022, a favorable balance of USD 1,390 million against the USD 2,530 of last year. Namely, a decrease of 40% that puts pressure on the availability of foreign currency. This despite the fact that the impact of higher energy import costs is marginal in that period. It will be only from next month that the rise in international fuel prices will be fully reflected in the trade balance and, also, in the balance of the Central.
But that is not the only factor. economists Jorge Vasconcelos and Mariano Devitafrom IERAL, point out a key piece of information: the exchange rate delay. “We must bear in mind that the exchange rate has fallen behind by 14% compared to a year ago, making imports cheaper in relation to the incentives to export.” While the prices of exports, they indicated, registered a year-on-year increase of 22.6%, imports did so only by 13.7%, a relationship that could be affected in the next statistics by the impact of the war in Ukraine.
To meet the goal with the Monetary Fund of reaching net reserves of USD 6,100 million by mid-year, the BCRA must still obtain more than USD 2,000 million
A recent report from the Rosario Stock Exchange (BCR) also points out a key element: the gradual normalization of the account for trips abroad after the restrictions imposed by the pandemic still in force in many countries during the first half of last year, increased the negative result of the “net export of services”. “In the first months of 2022, it showed a negative result of USD 1,313 million, almost USD 1,000 million more than in 2021. This is due, in part, to the gradual normalization of the travel account after the pandemic”explained the BCR, which also cited the higher interest payments on both public and private debt during the first months of the year.
In this scenario, in order to meet the goal with the Net Reserve Fund of USD 6.1 billion in the middle of the year, the BCRA must still obtain more than USD 2 billion. A tiny part of that figure could come from the agency itself, since if the goals for the first quarter were formally approved, the Government expects a disbursement in the middle of next month of some USD 4,150 million. With that money, he must pay off a maturity of USD 3.8 billion, which would allow him to save at least some USD 350 million.75% more than what he has managed to accumulate up to now on his own, without taking into account the prior drawing of the Fund.
“At the moment, we find ourselves with a reduction in the trade balance surplus and a decision by the Central Bank to fulfill pending commitments with importers, together with an exchange and monetary policy that is following ‘behind’ the inflation rate. Hence, until mid-April the Central Bank has not been able to accumulate reserves originating from net purchases from the private sector,” IERAL stated, while adding in its latest report that “it is possible that with agreement with the IMF and given the certainty of a reinforcement of its reserves, the Central Bank has decided to release pending payments of imports. This makes the balance of net purchases of foreign currency in the market practically null”.
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