The Central Bank of the Argentine Republic (BCRA) specified that net reserves are negative at US$ 4,181 millionwhich explains the national government’s search for US$ 15,000 million and the delay in exiting the exchange rate.
After acquiring US$109 million this Wednesday, The BCRA’s gross reserves rose to US$30,017 million, but in the disaggregated of its composition, those that are freely available remain in red.
For example, The total includes the swap with China of US$ 18,000 million, which is subject to conditionalities and of which a tranche of US$ 5,000 million expires in June. It should be remembered that the contract for this operation is secret and the details such as the interest rate paid are not known.
That money was used last year by former minister Sergio Massa to pay for imports at a time of dollar shortage. Now the Government must renegotiate its expiration with China. Without many alternatives in sight, the proposal would be a “roll over” (postpone payment).
With this objective, the president of the BCRA, Santiago Bausili, and the Chancellor, Diana Mondino, will leave for Beijing at the end of the week to face a negotiation that does not look easy given the position that the president, Javier Milei, publicly expressed on China. The attack in recent days on the Asian country’s base in Patagonia could pursue the objective of establishing a position in the face of these conversations.
He Detail about the situation of the Central Bank’s reserves was presented by the vice president of the entity, Vladimir Werningin a series of meetings held in Washington within the framework of the IMF Spring Meeting and which emerged in the last few hours.
Werning, He is not just another official, He is one of the four who flanked President Milei in the speech he gave on Monday at night and that he was considered a “patriot” by the president.
It should be noted that adjusting to the international methodology for calculating net reserves, the BCRA deducts from the gross balance some US$ 3,000 million of Government deposits to pay upcoming maturities and US$ 1,740 million of BOPREAL that must be paid within one year. This resulted in dissent among economists since some ignored these obligations and considered that the reserves had already moved into positive territory.
The reason for reservations in red
Although the BCRA has purchased foreign currency for US$14.5 billion since the new government took office, The red of US$4,100 is explained by debt payments and a portion of imports.
This imbalance is what prevents Milei from getting out of the exchange trap and explains the request to the IMF for US$ 15,000 million.
With negative or insufficient net reserves and even with the gap between the official dollar and the parallels around 20%, the opening of the stocks without foreign currency in the Central coffers could lead to a run against the peso that unleashes the hyperinflation that the Government he boasts of having avoided.
Without the help of the IMF -already explained on several occasions- and with the fearful private financing of the political process and the social consequences of the adjustment, the lifting of exchange restrictions seems to be postponed until the end of the year.
Although it is expected that the lLiquidation of the harvest until July means an important income of currencies, analysts understand that even would not be enough to dismantle the stocks.
Another key information: A few days ago, Milei himself ruled out accelerating the devaluation of the exchange rate before businessmen, which would be a stimulus for greater liquidation and therefore accumulation of reserves.
What is the payment schedule facing the Government?
He Government faces a very tough schedule of payments in foreign currency over the next six months. Next week alone it has to pay US$2.73 billion to the IMF. On the 30th it has to cancel postponed maturities for US$ 1,936 million and the next day there is an interest payment of US$ 800 million that cannot be extended.
He Government trusts that during May the IMF will replace those US$ 800 million, as a result of the approval of the eighth review of the agreement in progress. In June the situation will be more alleviated with total maturities of US$382 million, but the curve steepens in July (US$6,532 million), August (US$5,239 million) and September US$810 million.
Meanwhile, in today’s session the blue dollar returned to the $1,035 area, without major changes compared to recent days. In the stock market the MEP rose to $1,014 and the Cash with Settlement to $1,054.
