"Net" reserves are barely 25,000 million USD, the rest is borrowed

With the disbursement of US $ 10 835 million made yesterday by the IMF, the central bank's international reserves reached a record of $ 77,478 million. However, it is a number that must be taken with tweezers. A good part of this total has already committed to pay debts maturing in the coming months and also for the Treasury to sell currencies on the foreign exchange market, in an attempt to control the price of the dollar.

There is another concept a little more rigorous behind this record amount, which is that of Net international reserves (INR), a value jointly controlled by the IMF and the Argentine government.

According to calculations made by Proficio Investment, a consulting firm that manages Alejandro Henke, this level of net reserves is only 25,000 million USD, one-third of the total. The remainder, more than USD 50 000 million, is short-term or medium-term debt that will have to be repaid; and dollars that do not belong to the central, but to the savers who deposit fixed amounts in foreign currency in the banks and that the entities fail to lend to the exporters.

At the level of the reserves published by the station, we must therefore subtract the liabilities, that is to say the dollars that are not theirs but that come from a debt or other sources. This significantly reduces the real range of action that the BCRA would have. And it is a very concrete explanation of the impossibility for the entity, presided over by Guido Sandleris, to intervene on the foreign exchange market if the price of the currency soars.

The level of net international reserves (NIR) is monitored quarterly by the IMF. This is a variable so important that the plant must comply with a certain stock to be located in the non-intervention area.

How do you arrive at the calculation of net reserves?

The gross stock published by the Central Bank on its website must be subtracted from the currency exchange with China and the Basel International Bank (USD 22,000 million); In addition, some $ 14,000 million deposited by banks into the current account of the BCRA (corresponding to the dollar deposit reserve of private investors, are determined by the difference between deposits and foreign currency borrowings).

"Repo", short-term loans from private banks, are also subtracted from gross reserves announced daily by the Central Bank, as well as the balance of withdrawals from the IMF not used to pay the installments of the public debt.

According to the account validated by the IMF, the account presents only 25 billion dollars "net". This explains why the defiance of the plant to deal with the reserves it has.

True growth of external badets

How could the BCRA increase net reserves? The best way is to buy dollars on the market, as happened in January and until the first half of February. During this period, the monetary authority has acquired 1 billion USD. These currencies did not come from borrowings, such as the last installment of the Fund, but from purchases made in the market, so that there is no dollar debt in return .

The spirit of the agreement with the Fund was that the Central Bank buys many more dollars, Whereas the currency would be near or even below the floor of the exchange band. High interest rates should contribute to this goal. However, mistrust moved the dollar away from this level and the BCRA could no longer add.

These net reserves are there to take care of them. To such an extent that the Fund authorizes the BCRA to intervene on the foreign exchange market only when the currency exceeds the ceiling of the non-intervention zone. This level is today $ 51.27. From this level, he could sell up to 150 million USD a day.