The provinces of Río Negro and Neuquén are not exempt from the pronounced recession that is evident at the national level. The contraction in activity is leading more companies to request financial assistance to pay mid-year bonuses.
The fiscal and monetary adjustment implemented by the national government is causing the paralysis of many activities and significant drops in sales. The operating cycle of companies has lengthened significantly, meaning that they take longer to convert their inventories into cash..
The liquidity problems derived from this situation have led some companies to request bank loans, not to carry out investments, but to finance working capital. More specifically, to pay their employees bonuses.
The good news is that this greater need for business financing is met with a greater supply of loans by commercial banks, and with low interest rates.
Aguinaldo: the situation in Río Negro
Bank credit lines for payment of salaries are not something new. The novelty lies in the greater number of companies that are forced to access financing to pay salariesin particular the bonus.
The first vice president of the Federation of Business Entities of Río Negro, José Luis Bunter, confirmed that the same scenario is true in the province. He described the situation of SMEs as “terrible”, with sales declines and cost increases.
“If you have to raise rent, electricity, water, all the fixed operating costs, and on top of that you have the addition of half the salary for each of the workers., you don’t arrive; Many of the SMEs do not arrive,” explained the leader, alluding to the difficulties they have in paying the half bonus.
“SMEs resort, as a last resort, to these loans; they are being used much more now due to the complex situation they are experiencing.”
José Luis Bunter, first vice president of the Federation of Business Entities of Río Negro.
That is why, as he points out, bank credit lines to settle assets are being used more. “SMEs resort, as a last resort, to these loans, it is being used much more now due to the complex situation they are experiencing“, frame. In addition, he noted that companies linked to non-essential consumer products are the hardest hit by the recession.
Bunter is also the president of the Cipolletti Chamber of Industry and Commerce. He pointed out that in that town in the Upper Valley of the Negro River the damages of the crisis are mitigated by the present of Vaca Muerta. “The situation in Cipolletti is complicated, but not to the extreme like other provinces and towns“, he pointed out, and added that in that city “the advantage is that there is a niche of people who have not yet faced this problem as a consumer, because it is related to hydrocarbons and they earn very well.”
Aguinaldo: the situation in Neuquén
The economic pulse of the province is marked by hydrocarbon activity, in particular by the development of the Vaca Muerta formation. However, In some sectors the rise of oil and gas not enough to counteract the effects of the recession.
One of the activities hardest hit by the crisis is construction. Giulio Retamal, president of the Neuquén delegation of the Argentine Chamber of Construction (Camarco Neuquén), described a worrying panorama of the sector. “Obviously, companies are having problems paying the bonus, and there are banks that are offering lines of credit to finance it,” he noted.
“Companies are having problems paying the bonus, and there are banks that are offering lines of credit to finance it.”
Giulio Retamal, president of the Neuquén delegation of the Argentine Chamber of Construction.
Among the causes of the difficult present of the activity, Retamal pointed out the increase in construction costs and values measured in dollars, and the brake on public works.. “The companies that work in public works are, without a doubt, the ones that are having the worst time and the ones that are having the most problems,” said Retamal, and explained that “contracts have been paralyzed, renegotiated or slowed down.”
Daniel González, president of the Neuquén Trade, Industry, Production and Related Association (Acipan), reported that sales are falling sharply in the province. “There are many offers to increase sales, I think they are depleting stockssince both manufacturers and importers had stocked up at high prices, betting on a greater devaluation, since inflation was going to continue,” he added.
“There will not be any problem paying the bonuses, as long as this financial assistance continues.”
Daniel González, president of the Neuquén Trade, Industry, Production and Related Association.
However, he ruled out that companies do not pay the additional annual salary in the coming weeks, precisely because of the large supply of bank loans that currently exist. “To private activity Credits are being thrown at us, and at very interesting rates.”Marked González.
In industrial activity, the panorama is different in general terms, since many factories work directly for Vaca Muerta operators. Roberto Enríquez, president of the Neuquén Industrial Association (Adineu), said that “not at all” there are problems paying bonuses.
“Neuquén is an island, and large companies are still paying in a timely manner; They usually comply.”
Roberto Enríquez, president of the Neuquén Industrial Association.
As the leader explained, the majority of the province’s industrial companies are not facing liquidity problems or mismatches. “Neuquén is an island, and large companies are still paying on time and correctly”Enríquez indicated.
More credit and cheaper
A greater supply of corporate loans by banks largely absorbs the greater financial needs of companies in Argentina. The loans are, in nominal terms, less onerous than until a few months ago.
One of the axes of the efforts of the Minister of Economy, Luis Caputo, and the president of the Central Bank, Santiago Bausili, is the reduction of the remunerated liabilities of the monetary authority. Only financial institutions can access them.
The remembered Leliqs became passive repos with the new management, and the passive repos are being converted, mostly, into Treasury bonds and bills and into credits for the private sector. The greater supply of bank loans is, in part, explained by this policy.
Likewise, to reduce the endogenous emission generated by repos, and to discourage their holding, The Central Bank has moved forward with an aggressive cut in the monetary policy rate. The strategy is made possible by the continuity of exchange controls.
The fall in the rate of fixed terms and virtual wallets is a consequence of this measure, which accelerated the liquefaction of the population’s savings in pesos. However, also a significant reduction in financial costs is evident: accessing bank loans is, nominally, much cheaper.
Other factors that push interest rates down lie in the expectation that inflation will continue to falland competition between banking entities to attract new customers and place their products.
Companies can find lines of credit for the payment of bonuses with nominal annual rates of less than 30%, that is, with negative real interest rates.. Repayment periods are mostly six months, and some entities offer grace periods of up to 60 days.
