Sandleris: "Decisions give priority to the use of reserves to preserve the stability of the exchange rate"

"We are allocating more reserves to contain the dollar". Finance Minister Hernán Lacunza summed up the spirit of society
measures announced this afternoon.

A few minutes later, the president of the Central Bank, Guido Sandleris, confirmed it in a statement: "The decisions made give priority to the use of international reserves to preserve the monetary and financial stability, even if it implies delay the payment to the big investors of the public debt. "

The text also states that the Central Bank "will continue to use restrictive monetary policy and foreign exchange interventions as central instruments to moderate nominal volatility" and "will continue to do its utmost to contain nominal volatility and to ensure the long-term stability of the financial system ".

According to the statement of the Central Bank, "this decision should ease the pressure on the foreign exchange market, reduce the potential demand for foreign currency and ensure the availability of resources to limit volatility," said the statement from the Central Bank.

And he explains that the announced measures help avoid three mistakes that were made in other cases of sudden interruption of access to the credit market. "The first common mistake is to try to gain time by artificially stimulating the banking system so that it contracts more public debt," he said, adding that Argentina "has a liquid and solvent banking system, without monetary asymmetry and with low exposure to the public sector ". that "the problem of short-term public funding must not contaminate it".

"Another mistake is the reckless use of the central bank's international reserves to deal with public debt payments, which would limit the Central Bank's tools for ensuring monetary stability."

"The last of the usual mistakes is to print pesos to meet the local currency financing needs.To increase the monetary base above what the public is asking for, in short, a rise in inflation and monetary pressure, "concludes the text. .

In order to allocate more reserves to contain the exchange rate, Lacunza announced that the debt would be rebalanced, that is to say that the deadlines would be extended for legal entities with Letes, Lecaps, Lecer and Lelinks, which is a short-term debt. , who will be paid 15% on the day of the expiry, 25% to three months and 60% to six months. Each security will accumulate its corresponding rate until the date of payment. In the case of Lecap, which expires after 2020, only three months will be extended.

Human persons will not be affected, as long as the amount credited to the main account on the expiry date is equal to or less than the amount recorded in the same account on July 31, 2019. "Human persons will debit in due time" said Lacunza.

The finance minister also announced that he was proposing to the IMF "to start the dialogue, which will end inexorably at the next mandate, to reevaluate the deadlines of its debt" that the country has with this international organization.

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