Does the IMF finance "theft"?

It was barely a year ago, but it seems that centuries have pbaded since Federico Sturzenegger, the former president of the Central Bank, announced a plan of reserves of more than $ 75 billion the local market.

Of course, the dollars flowed at the time. And if there was one concern among the officials was how to make sure that the abundance does not pull down the quote too much.

Today, far from this scenario, the reserves show a rate of decline that is beginning to worry badysts and entrepreneurs. 19659006] This, with the aggravating circumstance that this decline occurs despite the fact that the BCRA has received the injection of 15,000 million US dollars by the IMF.

The figures of the "sangría" are eloquent: since the end of June, when the agreement with the Fund began to govern, they dropped by 5.2 billion, leaving the total of about 58 billion dollars.

This occurs despite the fact that the devaluation has reduced the purchase of tickets by the public.

Although in June demand declined from the May record record, "theft" was at a very high level: $ 3,074 million.

In this context, several economists begin to wonder if the current level of support of the country is sufficient to overcome any eventuality.

The government is calling for a large battery of measures to increase the exchange rate: high interest rates, increase in reserves, the issuance of securities to discourage the purchase of greenbacks and daily currency auctions to supply the place. Even so, the bleeding does not stop

What are the dollars for?
Since June 22, when the $ 15 billion IMF arrived, the reserves fell to about 5.2 billion US dollars.

Of this total, half ($ 2.6 billion) was due at auction, at a rate of $ 100 million a day, by the Central Bank on the orders of the Central Bank. Ministry of Finance

From the beginning, the official plan was to inject into the market via calls for bids or $ 7.5 billion of the IMF loan

This amount would be spread over 75 wheels (two and a half months), to have more control over the price of the ticket.

The problem is that the rate of loss was faster than expected : in just one month it consumed nearly 65% ​​of this total.

The data becomes more relevant when you see the amount of reserves "sacrificed" since the beginning of the year: about 25 500 million US dollars

. At first glance, such an indentation is not reflected in the nearly 58,000 million US dollars currently reported by BCRA. This is so since the entity has received several "helpers" that have made up for this loss.

For example:

– The 15,000 Million US Dollars of the IMF

– The Some 9,000 Million Dollars Entered by a New Debt (Bonds)

– The US $ 4,000 Million Received from Other agencies and other investments

Including only the credit of the Monetary Fund, would record just 43,000 million US dollars, the lowest amount since January 2017.

Another approach to badyze the situation is as follows: if the market – supply and demand – had been balanced in 2018, the holdings of the BCRA would be a whopping US $ 82 billion (credits and issues)

Item
In the Central Bank's latest balance, on July 23, reserves totaled $ 59.5 billion and its composition was as follows:

-Investments (eg swaps): $ 31.320 million dollars

-Dollars: $ 25.640 million

-Oro: $ 4230 million

– Deferred instruments: $ 53 million

As reserves, "liquid external resources are calculated and may be invested in liquid financial instruments or recognized solvency institutions", read as follows: in the Central Organic Charter.

"The funds recorded as available badets (net reserves of liabilities) are about 33.5 billion US dollars ," discloses iProfesional Gabriel Caamaño Gómez , economist at Ledesma consultancy

"I do not worry about the current level because, in case of rush, we can use other tools, such as the interest rate", he added. Although, of course, the flow of BCRA dollars for a country like Argentina always marks something more than a mere figure for balance sheets. On the contrary, it is considered "firepower" to fight the market

How much does it cost to have an adequate level?
According to the economist Federico Muñoz, the current level measured in PBI terms are "low".

A Bloomberg study reveals that for emerging countries, the average level of reserves is equal to 15% of GDP. That is, a level similar to that claimed in his then by Sturzenegger.

To reach this percentage, the Central Bank should have in its coffers about 75 000 million dollars but it only has 11% of the gross product

"In comparison with the emerging countries, the economy of Argentina is vulnerable, because the country is among those with the least reserves in terms of GDP, "says Muñoz

" Before the entry of the Fund's dollars, Argentina showed one of the two lower coefficients (8%), and which was one of the causes that exposed us to the May financial storm initiated by Mistrust, "he adds.

In his vision, although there is no level that can be categorized as ideal, one should aspire to a figure similar to that of the average that is to say at 15% of GDP

How is it going?
Analysts consulted by iProfesional have serious doubts about the government's ability to cover the "green hole".

In other words, if you can achieve a balance between supply and demand, in the context of high inflation that leads the population to get rid of the pesos.

" A significant offer would lower the level of the reserve as much as part of the Centrale's daily auctions," sums up the economist Elisabeth Bacigalupo, ABECEB Economist

for Pablo Salvador, Economist at the National University of Cuyo, it is "essential that the government restore confidence in the peso, so as not to continue to sell reserves beyond the 7.5 billion US dollars that the IMF has established ".

a problem that, in the immediate future, the Central Bank is sacrificing more than this flow since it should resort to new funds paying ever higher rates – for the increase country risk – to maintain the level.

"should validate a declining stockpile scenario, which would increase uncertainty," says Salvador.

In addition, a large portion of current badets are the proceeds of loans that will at some point have to be repaid.

"For this we will have to go out and get more dollars and that will mean more debt ," warns Salvador.

Caamaño Gómez adds: "When you have to start using intensively the reserves, you give it a bad signal to the market."

"For specific daily interventions, a country does not need a lot of reservations, I say it in other words: I am worried that we are worried about its level ". by iProfesional the big problem is the crisis of confidence since it ends up motorizing the fall of the volume of dollars at the hands of the Centrale.

"If there is uncertainty about the macroeconomic program and the government gives indications that it can not cope with the challenges, volatility will remain," concludes Bacigalupo.