May 27, 2022 1:29 pm

The Government asked the BCRA for pesos to buy the dollars with which it will pay the IMF

The Government asked -and obtained- from the Central Bank (BCRA) last Friday a new loan for $122,000 million, money that it used to buy something more than US$1,100 million that it will use to keep up to date the payments for the debt contracted with the Fund. International Monetary Fund (IMF) and the rest of the multilateral organizations.

The transfer was made in concept of Temporary Advances (AT), the only way of financing the National Treasury -although already very limited by the limits imposed by the Organic Charter to the BCRA, since at the beginning of October he exhausted the possibility of assisting him through the transfer of profits and his 2021 balance. That is because he stepped on the exchange rate and exponentially increased his expenses to print tickets and pay his remunerated debt). Thus, it will no longer reflect earnings as in previous years – when it could only do so due to the strong devaluation of the peso – or they would be barely minimal, as confirmed THE NATION.

To this we must add that the principle of agreement with the IMF will force it to reduce from 4.6 to 1 point of GDP (from $2.1 trillion to 0.65 trillion) aid through issuance, a resource that was abused in the last two years the Fernández administration, in principle due to the demands posed by the outbreak of the pandemic in a country without credit or tax savings.

But last year it did so to give free rein, in the second half, to public spending for electoral purposes, which led the BCRA to make 11 transfers for $1.15 billion to the Treasury in the last quarter. Even when inflation gave very clear signs of not moderating, neither because of the trampled dollar, nor because of the freezing of tariffs, nor because of the successive price “agreements”.

This time it is the first TA of 2022 and it implies a little less than a fifth of the total amount of assistance that the BCRA could give to the Government, if it complies with what was pre-agreed with the IMF, something to which it should aspire because a breach could lead to the brake on committed reimbursements.

It is within the amounts provided for in the agreement and the decision of the Ministry of Economy to request this assistance is now related to its financial planning for the year”, clarify from the monetary entity.

Unlike the repeated transfers of last year, the current issue, in principle, “has no monetary effects, since it did not finance part of the primary spending, but rather the purchase of dollars to pay foreign debt services.”, noted the economist Leonardo Chialva, from the consulting firm Delphos Investment.

The “in principle” is linked to the destination that the Government could give to the SDRs that the IMF must repay to the country as part of the agreement.

It must be remembered that in August 2021 the Government incorporated this extraordinary resource into the Budget for an amount equivalent to US$4,334 million (Decree 622/2021) to obtain an “extra” $422,174 million that allowed it to carry out an accounting maneuver to circumvent the limits. financing set by the CO of the BCRA, a strategy that -if repeated- would imply a new and important injection of pesos.

Thanks to this, it gave free rein to the operation of the little machine, to the point that the BCRA came to deliver to the Government “resources that even exceeded the fiscal redundancy of the year,” noted the economist Martín Polo, chief of strategy at Cohen Aliados Financieros.

Little machine

The agreement with the IMF establishes three restrictions on the BCRA: the aforementioned issuance guideline and a commitment to move towards a “positive” interest rate scheme to stimulate savings in pesos and to add at least US$5 billion to net reserves. , an objective that is considered “fulfillable” given that this figure “includes the projected net disbursements of the Fund itself and the rest of the multilateral organizations,” explained days ago the economist Ricardo Delgado, director of the Analytica consulting firm.

Martín Vouthier, chief economist of Anker Latin America, highlights that the scheme defined in the agreement with the IMF basically aims to stop the monetary binge, to have a chance of lowering the nominal value of the economy. “It is more restrictive with monetary financing than with the fiscal deficit goal,” he remarks. That reason that leads him to believe that this time there will be no maneuvers to dribble goals.

This idea is in line with the coordinated pronouncements made at the beginning of the week by the BCRA leadership.

“When there is a fiscal deficit and it needs to be financed with indebtedness and issuance, there is a loss of sovereignty,” said its president Miguel Pesce in an interview, when until a few months ago he did not hesitate to affirm that they would assist the Treasury every time he demands it.

“It is totally anomalous in the world that your only source of financing is the Central Bank. The best form of financing is for it to be your own currency so as not to lose sovereignty and not generate uncertainty,” said the first vice president of that entity, Sergio Woyecheszen.

Two of the main objectives of the agreement are to accumulate reserves and reduce the monetary issue. It also includes that savings in pesos beat inflation, although “we do not plan to raise rates disproportionately as the previous government did,” said the second vice president, Jorge Carrera, in the midst of a coordinated attempt to change expectations market.

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