make more flexible access to the OFFICIAL DOLLAR for imports / Argentina News

The Central Bank (BCRA) ordered make the conditions more flexible automatic access to the exchange market for imports of capital goods with advance payments of up to 270 days, for all goods with values ​​of up to one million dollars.

“This will especially facilitate the access of various SMEs to capital goods that will allow them to increase their production and efficiency,” said the monetary entity through a statement.

The measure was taken after imports fell sharply in September and October, due to the loss of dollars from the Central Bank.

The truth is that from March to August inclusive, imports had been growing at a rate greater than 60% year-on-year, (it reached 79% in June) they fell to 42% in September and fell to 31% in October.

In October, Renault informed that it will stop selling its Kwid model in Argentina due to “availability problems generated by restrictions on imports and with the aim of promoting domestically manufactured vehicles.”

The Kwid was the most economical model of the French brand and one of the best sellers, although in recent months it had begun to fall in the ranking of patents due to the lack of availability of units.

In the field, “between 15 to 20% of the harvesters are stopped due to the lack of covers and mechanical spare parts,” Jorge Scoppa, president of the Argentine Federation of Agricultural Machinery Contractors (FACMA), explained to Data Clave.

“The prices are in dollars, but not the official one, because people do not know how much they are going to pay when they have to replace the capital,” Scoppa said.

He warned that “the price of fertilizer has tripled. Nitrogen and urea are not abundant. But it is one thing that the price has gone through the roof and another thing is that it is not achieved. That puts the corn crop of second, that it requires a lot of nitrogen. ”

BCRA reserve crisis

The limitation to the purchase of air tickets with a credit card was one of the most impressive economic measures of the year and, at the same time, one of the most obvious and announced. With the lifting of sanitary restrictions, it was inevitable that one of the main “taps” would reappear through which currencies escape: the massive departure of Argentine tourists abroad.

In fact, if until now the Central Bank’s reserve problems had not been more serious, it was “thanks” to the anesthesia that the pandemic caused in the tourism sector. But it was enough with the loosening after the mass vaccination for the seriousness of the problem to be hinted immediately: the September data already marks levels that have not been seen since December 2019.

That month, the last officially reported by the Central Bank, indicates that the “services” account registered a deficit of US $ 558 million, within which freight and insurance account for US $ 396 million, while travel, tickets and other credit card payments totaled $ 228.

How serious could the situation be for official accounts? Judging by the historical background, very serious: in 2019, which was not one of the brightest years in tourism terms, given that the currency had already devalued a lot, the output of dollars for tourism was US $ 7,000 million.

Clearly, a figure impossible to be offset by the entry of foreign tourists, despite the optimism that officials such as the Chancellor were trying to convey Santiago Cafiero and the minister of tourism, Matias Lammens, who had been confident that the country would quickly recover the number of visitors prior to the pandemic: about 6.2 million tourists a year.

A threat to the Central reserves

The one who, obviously, did not share that optimism was for the head of the BCRA, Miguel Pesce, who saw a clear and inexorable situation: with net reserves plummeting and, to top it all, with expectations of a summer devaluation, this item of tourism could only go up.

To have a dimension of the potential damage of outbound tourism on the Central Bank’s cash, the 2019 deficit for the travel account more than triples the level of net reserves that economists warn that remain when the official figure of US $ 42. 000 million are deducted from bank reserves, international loans, swaps and holdings in gold.

In fact, the dates most feared by Pesce were not those of the electoral calendar but those of the promotions of the tourist agencies: tourism had already returned to be the main protagonist of the CyberMonday, where they exploited air travel offers in 12 fixed installments.

Entrepreneurs in the tourism sector, as CyberMonday organizers made clear, believe that there will be an “catch-up effect” on the part of those used to vacationing abroad and who had to abstain due to sanitary restrictions.

For now, news arrives every day about the reopening of air routes that had been discontinued or restricted. For example, the low cost airline Flybondi, which had announced the return of flights to Florianópolis and Punta del Este, It has now added the routes to São Paulo and Rio de Janeiro.

While classic destinations, like Madrid and Miami, They already operate with several daily frequencies and at least three airlines that make the direct connection, almost in the pre-pandemic regime.

History shows, on the other hand, that few things are more stimulating for tourism than the fear of a devaluation. And the last few weeks have been lavish in forex adjustment forecasts.

The truth is that there is a clear correlation between the periods of greater outflow of dollars for tourism and the moments in which an exchange delay was perceived.

At its record time, in 2013, the outflow of foreign exchange for tourism touched the figure of u $ s8,730 million. The following year, there was a sharp drop of 38%, and curiously this happened at a time of “relaxation” of the stocks. Of course, the fundamental detail was that in the summer of that year, with Axel Kicillof just taking over as minister, the dollar rose 25%.

So if the experience of the stocks left a lesson, it is that, when it coincides with a moment of exchange rate delay, there is no exchange restriction capable of stopping the will of the Argentine middle class to travel. Given that airline tickets are quoted in dollars, the ratio that governs in this case is the cost of the ticket against the salary in dollars.

In the management of Mauricio Macri, Without exchange stocks, the historical record of foreign currency outflow due to tourism was registered. In 2017, when it was decided to anesthetize the exchange rate to arrive with better social humor at the mid-term legislative election, travelers they cost the Central Bank US $ 10.6 billion.

In those days when it had become fashionable to make purchases of electronics, clothing or whatever in Chile, Miami and other destinations with cheaper costs than Argentina, balances for spending with credit cards abroad reached the u $ 800 million and it was growing at an unbridled rate of 30% per year.

Pesce, between Black Friday and the IMF

And, now, this new restriction comes just when another boom was expected.e promotional sales with Black Friday. In fact, one of the complaints that exploited as soon as the official resolution was known was that the agencies had already prepared their promotional packages and that this move would force a review of the entire financial strategy.

At this time, the tourist market is abuzz with rumors: while there were declarations of repudiation, there are versions of legal actions – there are those who maintain that the BCRA does not have constitutional powers to prohibit financing in installments – and there are also rumors regarding urgent measures by the banks to try to alleviate the blow. It is speculated that by means of new lines in the form of personal credit, the use of the card, the means massively used by tourists who go abroad, can be replaced.

But the truth is that, seen from Pesce’s point of view, the controversial measure has its logic: no more taxes can be added to tourists. Since December 2019 they pay 30% “solidarity” on the value of the dollar, to which last year was added the perception of 35% in advance of Profits or Personal Assets. And this is added to other items that double the cost of a plane ticket, such as fees, administration expenses and specific taxes.

In other words, more taxes that make travel more expensive cannot be implemented, with which the only thing left at hand was to restrict funding.

The problem for Pesce is that, by law, airline tickets must be sold in pesos and then, for more taxes that make it more expensive, as long as there is an expectation of possible devaluation, the attractiveness for the consumer will exist.

The slogan is clear: whoever wants to go abroad you will need to use your own dollars and not ask for them at a price that even the officials themselves perceive as “subsidized”: the situation of the Central is not enough so that foreign exchange can be spent on the vacations of the middle class.

Ironically, this is a point of view in which there is a coincidence of vision between the Government and the International Monetary Fund: the organism’s principle is not to assist a country with dollars that uses that aid to artificially sustain an exchange rate, since this ends up financing capital flight.

That is why the classic IMF suggestion is let the exchange rate float until it reaches its equilibrium level, while the sale of “its” dollars to defend a listing is prohibited.

Of course, everyone at this point understood that “Argentina is different”: the macrista experience itself convinced officials that the country’s bimonetary nature means that the devaluation crisis may have no ceiling and that is why they even agree to the validity of the “stocks” short-term exchange rate. Without the possibility of devaluation, the only way to stop the exit of the dollars that reinforce the Central Bank’s reserves is a rigid exchange regulation.

It sounds paradoxical, but the measure adopted by Pesce, which at this moment irritates the middle class and which has been condemned by the opposition and businessmen, is an important step towards signing an agreement with the IMF. At the end of the day, if the organization does not want to repeat something, it is the situation of helping Argentina with dollars that immediately evaporate in the form of tickets to Miami.

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