The exchange balance linked to the services sector registered, for the second consecutive month, a deficit of 158 million dollars in March past, which involved a drop of 82% year-on-year. In the accumulated amount of the year, the services sector thus registers a deficit of only US$306 million – January had a surplus of US$84 million – when in the same period last year it had reached US$2,244 million, which reflects the adjustment of the external sector.
This is shown by the latest Exchange Balance of the Central Bank (BCRA) where the result of the Services account is explained by the net expenses for “Travel, tickets and other card payments” for US$259 million, “Other services” for US$70 million plus US$39 million in “Freight and insurance”which were partially offset by net income from “Professional and technical business services” of US$210 million.
In this regard, it is worth noting that income from Professional and Technical Services not only manages to stay afloat but is clearly in surplus in the sectoral balance.
It is also worth remembering that up to 20% of service exports can be entered into the country through the stock market within the framework of the aforementioned “Export Increase Program” (PIE), which is why that portion of the income does not appear in the published statistics of the exchange market and exchange balance because no registration was made in the Information Regime of Exchange Operations – with the exception of those collections that are received and deposited in local accounts in foreign currency for subsequent settlement in the securities market – .
As to Gross income from travel and tickets in March totaled US$230 million, increasing 44% compared to the same month of the previous year. “These income occurred within the framework of what was established by Communication “A” 7630 of the end of 2022, which excludes from the settlement requirement in the exchange market the income of funds with non-resident cards for charges for tourist services and for passenger transportation,” warns the BCRA.
It must be kept in mind that this regulation allows recipients to apply a higher exchange rate to card consumption in the country by non-resident tourists.
In any case, the balance of Travel and tickets continues to be in deficit since expenses remain above the average monthly average of US$400 million in recent months (in March they totaled US$419 million).
Foreign currency outflow for insurance and freight
Also the controversial issue of insurance and freight, which in 2022 escalated to a level of more than US$400 million in average monthly expenses, which historically did not exceed US$100 million, seems to have been purged of mischief and gadgets, in addition to the adjustment in the commercial flow.
In this sense, it is worth remembering that the then technical mission of the International Monetary Fund (IMF) caught the attention of the authorities of the Treasury Palace because the numbers were unparalleled with any in the rest of the world, where the costs of logistics driven by the pandemic, while Argentina seemed to be in another world. It is that in those years there were excesses in the outflow of foreign currency for these concepts with the undoubted damage to the BCRA reserves.
When comparing the balance of the first quarter of the year with that of a year ago, it is observed that The improvement in the services account is the result of the drop in gross expenses, especially in freight and insurance, partially offset by the reduction observed in incomehighlights the BCRA.
For its part, Primary income operations represented a net outflow of US$462 million in March, mainly due to net interest payments of US$451 million.
Regarding gross interest payments, the “Government and BCRA” totaled payments of US$410 million, of which US$348 million corresponded to interest payments to international organizations (excluding the IMF) and US$52 million to other interest payments. government interests, while the private sector made gross transfers of US$70 million.
Additionally, gross outflows of profits, dividends and other income abroad amounted to US$12 million. Finally, operations for secondary income showed a neutral result.
