The fall in reserves deepens, pending the disbursement of the IMF

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The gross reserves of the Central Bank (BCRA) continue to fall and are located at US$ 23,827 million at the close of this Thursday, after three days of sales by the Central Bank and while the agricultural dollar makes its last contributions.

In the round of changes this Thursday, the monetary authority sold US$ 34 million, which is added to US$ 94 million on Wednesday and US$ 21 million on Tuesday.

For their part, exporters contributed US$ 96.1 million, with which the program totaled revenues of US$ 1,973 million, US$ 27 million below the target of US$ 2,000 million that was set when it was launched.

This special exchange rate of $340 per dollar will be in effect until August 31, but the sequence of settlements allows us to infer that the operators sought to secure the transactions before the elections.

Consequently, the Central Bank will have to go through the next few days dealing with a modest inflow of foreign currency, while the pressure from importers is maintained.

From the Chamber of Importers they revealed that in the last days SIRAs payment authorizations were postponed, which brings as a consequence the brake on shipments destined for production. It even transpired that a major automaker had to stop production at one of its plants located in greater Buenos Aires due to a lack of inputs.

Since Alberto Fernández took office on December 10, 2023, the Central Bank’s reserves have fallen by US$ 20,000 million, while the gross external debt of the public sector has increased by US$ 79,000 million.

Although gross reserves are at historic lows, the situation is much more delicate when net reserves are analyzed, which according to some private studies would be negative at US$ 10.3 billion.

The Government intends to partially recompose this situation with the disbursement of the International Monetary Fund (IMF) that will derive from the approval by the Board of Directors of the Staff Level Agreement (SLA) that has already been agreed with the technical staff of the organization.

Although in Economy they discount that the approval will be obtained, the concern is for the times that it will demand. The IMF is in its summer recess and has not yet set the date on which it will meet to give a favorable case to the Argentine case.

At the Palacio de Hacienda they trust that the Board meeting will take place between August 17 and 21, as anticipated by the head of the portfolio, Sergio Massa.

However, one week after that period, the agency did not officially communicate when it will deal with the Argentine program.

It should be remembered that, according to reports, the agreement establishes that Argentina must achieve positive net reserves of US$ 1,000 by December 31 of this year, which seems like an extremely demanding commitment.

For its part, the blue dollar maintained the upward trend of recent days and closed at $605 in the downtown area of ​​the City of Buenos Aires, after having reached $610 at the start of operations this Thursday. In places in the interior of the country, more than $610 had to be paid to get one dollar. After 3:00 p.m., the price of coverage in the “caves” was $620.

Despite the paralysis that had occurred on Wednesday afternoon, the market operated without major problems during the day on Thursday.

Meanwhile, the MEP advanced to $540.18 again strongly conditioned by official intervention. In turn, Cash with Settlement rose $598.48.

The official devaluation was 0.4% and the price remained at $298.91, without changing the average of the last rounds that had led it to a rate of around 11% per month.

Massa insisted on blaming speculators for the rise in the “blue” and stressed that the controls that were carried out in the city had an effect because “it calmed down.”

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In another order, the Daily Monetary Balance of the Central Bank showed that on August 4 the monetary authority transferred $250,000 billion to the National Treasury as “Profit Transfers”.

In this way, so far this year the Central has assisted the Treasury for almost $2.2 trillion pesos, adding turnover of profits and Temporary Advances.

The failed agreement with the IMF established that Central Bank assistance should not exceed $890 billion at the end of the third quarter.

This need for help to the Treasury stems from the $1.9 trillion fiscal imbalance that accumulated in the first semester.

The text of the SLA published by the IMF says that “the agreed fiscal path does not imply an additional dependence on direct monetary financing of the fiscal deficit.” However, after a few days, Argentina would have breached that premise.

To cover the fiscal gap, the Ministry of Finance held this Thursday the last tender before the elections in which it faced maturities for $725,000 million and obtained funds for $821,576, with which it took on new debt for $96,500 million.

Of that total, 96% was in the hands of the private sector that had not participated in the different exchanges that took place during the year, with which the Economy was able to overcome the demand that it posed to go out and look for funds three days before the elections.