By the end of 2022, the dollars that Argentines and Argentine companies keep in banks, foreign accounts, safety deposit boxes or under their mattresses, largely undeclared, amount to US$ 246,946 millionroughly unchanged from €246.87 trillion in the same period of 2021, according to INDEC’s fourth-quarter balance of payments and international investment position report.
According to the 2006-2022 series, domestic dollarization was intense because the increase in currencies and dollar deposits in 2006 amounted to 74,282 million US dollars, rose to 153,309 million US dollars in 2015, increased again at US$226,569 million in 2019 to close at the end of 2022 at US$246,946 million.
If to the US$ 246,946 we add the portfolio investment in financial assets and direct investment such as assets, property and real estate – case of Miami, Uruguay – or other holding companies abroad, the total number of Argentine private “assets” at the end of 2022 amounted to the figure record US$380.179 million. A year ago it was 378,106 million dollars. This low growth is due, in part, to the deterioration in the value of external investment funds.
In 2015, this total of assets (bills + investments) amounted to US$ 246,203 million and in 2019 a total of US$ 352,332 million. Thus, in seven years (2015/2022), the increase was 54%, equal to 133,976 million dollars.
Meanwhile, if gross central bank reserves are added ($44,598 million, a similar total to year-end 2019, but with higher external debt), total foreign assets rise to a record $424,777 million. . US$417,768 million in the fourth quarter of 2021.
The INDEC report specifies that “as of December 31, 2022, of the total foreign assets held by residents, estimated at $424,777 million, $246,946 million corresponded to currency and deposits (58.1%); followed by equity participation for direct investment, US$44,832 million, reserve assets of US$44,598 million, and then equity participation and investment fund shares for portfolio investment, which reached US$41,512 million.” .
While for all of 2022 INDEC estimated a current account deficit of the balance of payments of US$ 3,788 milliondue to the lower balance obtained in the exchange of goods (US$ 6,343 million) while the balance of services presents a negative balance of US$ 6,833 million, which means an increase in the deficit of US$ 3,190 million compared to 2021.
“A large part of this increase was explained by the negative evolution of the transport balance originating from a greater dynamics of commercial exchanges with foreign countries and a greater flow of outbound tourism. This greater tourist flow also affected the deterioration of the travel account which contributed to the increase in the annual deficit of services“, according to INDEC.
For its part, the stock of total gross external debt (public and private) as at 31 December 2022 was estimated at USD 276,694 million compared to USD 267,868 million at the end of 2021: an increase of USD 8,825 million.
Foreign currency debt developed as follows: in 2006 it amounted to US$ 137,090 million, in 2015 it amounted to US$ 157,412 million, in 2019 it jumped to US$ 278,489 million to finish in 2022 at US$ 276.694 million. During the current government, the largest debt has been incurred in national currency, adjusted for inflation or in dollars.
Thus, while the external debt increased, and even more if one includes that of the Central Bank, the Provinces, the Entities and public companies, the dollars and other external assets are private and largely outside the fiscal reach of the State, inter alia, reasons why in a high proportion are not stated.
Precisely for these reasons, the Government has reached an agreement with the US to access the data of Argentine accounts in that country and the accounts in Switzerland are “in the crosshairs”.
These “assets” illustrate the outflow or flight of capital, a process that has increased year-on-year amid the depreciation of the peso, low growth and recession, high inflation, a pandemic-aggravated shutdown of economic activity, and restrictions on activity, increase in informality and increase in poverty. Also due to the sharp devaluations of the peso, the weighting of deposits, the obligatory exchanges of bonds, corralitos, corralón, shares, etc.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.