The government has come to stop imports due to the sharp drop in BCRA reserves

The lack of stock of tennis balls which revealed Infobae this week is just the tip of the iceberg. In recent weeks, complaints from various sectors about the slowdown in government imports have increased. The sports sector is precisely among the most affected: the large chains work with significant shortages and in most products (in particular shoes, but also clothing) they work with stocks at the limit: there is no replacement of what is sold.

Car manufacturers have also had problems importing units for the past few months. Entry for high-end cars is practically zero, but also few mid-range entries. Those who imported cars have long struggled to replace parts as needed, including tires.

Import barriers also focus mainly on finished products, as the government seeks to affect the purchase of inputs as little as possible so as not to harm the industry.

Lack of stock of imported items is increasingly visible in bazaars, home decor items and furniture stores, who find it increasingly difficult to get into the products and what little they have left is sold at exorbitant prices.

In all these segments there is a particularity: demand is increasing (in many cases pre-pandemic levels have already been exceeded), but there is no supply of products to supply it and many sales are lost.

Import barriers also focus mainly on finished products, as the government seeks to affect the purchase of inputs as little as possible so as not to harm the industry.

The same thing happens in many industries, in which there is no direct price benchmark. The trader sells at all costs because the uncertainty on the possibility of replacing the product is total.

As has happened in the past, The import substitution strategy is moving slowly in almost all areas and does not even meet the needs of the local market by far.

The government took advantage of the strong inflow of dollars from the first half harvest to further open the floodgates to importers. Indeed, in the second quarter and also in July, the level of imports was around 6.5 billion USD per month, record levels. But now, although there is still no official data, everything indicates that this volume has dropped considerably. In the first eight months of the year, imports increased by nearly 53% to reach $ 40,000 million. The incognito is so forward he will know how to keep up the pace.

The greater restrictions on the entry of imported products coincide with a more complicated exchange rate scenario. Farm dollar settlement has fallen sharply, as it does at this time of year, and only increases in December. The consequence is that the central bank suffered a significant loss of reserves partly due to electoral uncertainty. Since the end of August, more than $ 1.2 billion has disappeared, in addition to the $ 1.9 billion that went to pay the IMF this week.

The central bank suffered a severe loss of reserves and the exchange rate differential slipped above 90% in September. Faced with this scenario, the government has chosen to bet on imports and deal with dollars at least until the elections of November 14.

But this is not enough with the intervention, because the price of free cash payment has already reached $ 190 before dollarizing pressure from companies. The BCRA is using around $ 20 million a day to prevent the spread from widening, but this intervention would not be enough to contain the dollar’s rise in the financial market.

According to the calculation of different economic consultants, the central bank will have to devote an additional $ 800 million to contain the exchange rate until the elections.

The data that the head of the BCRA consults on a daily basis, Miguel PesceIt is the level of liquid reserves, which evaporates between interventions in the official market, that is used so that the spread and payments to agencies do not skyrocket. However, The danger is that the end of the year will be reached with virtually no cash dollars, which would substantially reduce the ability to intervene in the market. According to the economist Gabriel RubinsteinIf the current rate of intervention continues, by the time of the elections, the BCRA will have exhausted its liquid reserves.

On the other hand, it is also expected that in December, with the entry of dollars from the wheat harvest, the market will be able to balance and this will allow easier access to foreign currencies for importing. But before that it will be necessary to pass the previous poll and the reaction of investors to the result of November 14th.

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