Will it continue with a greater import shutdown?

Those who are anxious to know how long the exchange rate peace will last at the end of the year and from when the government will begin to take precautions to avoid the summer tension with the dollar they had the first signs in the last hours.

Not even with the widely celebrated news outdated soybean in the Chicago market the $ 500 mark -which, according to estimates by the Rosario Stock Exchange, would allow the soy complex leave 35% more dollars in 2021 than what you left in 2020, by reaching the figure of 34,800 million dollars, he was able to hide the undisguised.

After having doubled the monetary base and issued securities to be absorbed, which already exceed the number of pesos in circulation, the Central Bank is still in difficulty. Never mind that he has a few days of truce, like the one on Wednesday, in which he was able to buy some 25 million dollars: the reserves are still scarce -a net level of about US $ 1,500 million-.

On the other hand, according to an estimate by economist Esteban Domecq, although the current account – that is to say the difference between the dollars that come in and those that go out – continues to give a positive result of 3.1 billion dollars. dollars, the number becomes negative. When we consider the financial account: for payments abroad, 5.1 billion dollars came out in 2020, to which must be added the “flight” of savers for 3.04 billion dollars.

In short, with one of the toughest and most restrictive stocks, the net count was a loss of reserves of US $ 5,040 million during the year.

Even the euphoria over the $ 500 soybean couldn’t hide the central bank’s cash flow problems, which took more restrictive measures

And, for the worse, everything indicates that these are the last days before the spread between the official exchange rate and the parallel dollar returns to its pre-Christmas levels. After all, this monetary distortion, not the corn shortage, is the real one conflict fund between government and rural producers.

The corn unions themselves have argued that with a production level of almost 50 million tonnes, the last thing in the country is the risk of shortages, but instead they have recognized the supply problems. A true Argentine classic: faced with the distortion of the exchange rate, producers are extremely careful when it comes to marketing cereals.

Many already warn that the risk of shrinking dollar income and, more importantly, that the dollars that come in can actually improve the central bank’s position. This is the case of the consulting firm PxQ, headed by Emmanuel Alvarez Agis, which forecasts the current account surplus at $ 4 billion but observes that the government will not be able to take advantage of it as long as the gap remains high and does not inflation expectations are moderate.

Dollars are not enough

The first symptoms of this problem had already been observed with the latest foreign trade statistics. The data from last November was very telling in this regard: imports increased by 20% while the exports fell by 25%, which brought the surplus down to just US $ 270 million, a quarter of what had been recorded in the first half months.

It is true that there are temporary factors for this to have happened, but there is also a structural dynamic: when the economy enters the recovery phase, it automatically takes more currencies to buy inputs and products. machines. In fact, economists have used the following formula for years: for every point in GDP growth, imports must increase by three percentage points.

And the government expects activity to rise by at least 5% for next year, which marks everything a challenge in the management of imports.

This is why, since last year, the most radicalized wing of the government has demanded that the few dollars available be managed with more care, in order to no longer channel the currencies towards imports considered “luxury” or which compete directly with the products of national industry. .

“The dollars are to produce, not to save”, synthesized the president Alberto Fernandez, when officials finally persuaded him that despite what he said during the election campaign, he had to maintain discretionary controls.

And in the last few hours, new steps have been taken that mark what could be the trend for 2021: the Central Bank has announced more severe restrictions on luxury imports. “An anti-Lamborghini measure”, officials defined it, but in the market the alarms were raised immediately: there is a history of restrictions that started with luxury goods and quickly they have been extended to imports of consumer goods.

The measure implies that a series of products (corresponding to around 70 tariff items) they must finance their imports, without access to the foreign exchange market or to operations such as “counted with liquid

Importers who bring in a luxury product can only enter the financial market a year later. In the meantime, they have to obtain their own financing, either with their own currencies or with foreign currencies. In other words, as he claimed, there will be no central reserve dollars available for luxury goods.

It includes, in addition to the aforementioned “Lamborghinis”, motorcycles, boats, jewelry, caviar, whiskey and other high-end drinks.

At first glance, this move would seem safe from criticism in a country lacking in reservations. Except the fact that he suspicion that the restrictions may not be removed here.

This is a measure that could be read as part of supporting the domestic industry, especially after acquaintances 202 automobile production data0 -257 thousand units manufactured, 137,000 exported, the worst records since the debacle of 2002-. However, one should not lose sight of the fact that the Argentine automobile industry is a strong demand for foreign currency, so that from the point of view of the Central Bank treasury, the promotion of the industry does not appear no longer as a panacea.

In the city, they closely follow the strategy of the powerhouse, which tries to maintain parallel dollar content, even at the cost of sinking bonds.

Distrust for the future

So far, the market has been making noise that this restrictive measure was released shortly after an announcement regarding a new overall record so that exporters and importers have less bureaucratic access to foreign trade operations. But that some see as an example of greater control in the management of foreign exchange.

The truth is that the first reactions revealed a distrust of how will trade policy followl in 2021.

“This is the exchange rate reached by the BCRA, by practically banning imports. Today, they are. Tomorrow, with less dollars, they will be more,” he warns. Christian Buteler, one of the city’s most influential financial analysts.

More graphic, the economist Gabriel Zelpo ironically: “Today is anti Lamboghini, tomorrow Volkswagen.”

While economist Iván Carrino described the measure as “more interventionism to solve the problems of interventionism. ”

And, even more sour, the opposition MP Luciano Laspina suggested that the restrictions would pave the way for discretionary situations: “Excellent business for smugglers with access to power. A new national bourgeoisie is born … but militants, be careful. ”

The truth is that the response of a greater trade closure to exchange rate problems has been met with strong skepticism.

By case, Jorge Vasconcelos, of the Mediterranean Foundation, recalled that the cycles of high exchange rate spreads were not sustainable, due to its effect of discouraging exports alongside a boom in demand for dollars to be imported.

“Although these bad incentives have become visible in a short time, drastically reducing the trade surplus, the government has yet to make it clear whether it will start solving this problem at its roots or whether it will only try to operate on it. the consequences, a scenario in which restrictions and controls would be accentuated, a contraindicated path if we hope to recover investments and jobs, ”he warned.

In the meantime, the government is continuing its attempt to eliminate parallel dollars by intervening in the bond market. In the last days, Central had intense participation, the result of which was decline in bond value sovereign debt, which are trading again at the level of paper with risk of default.

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