Minister Sergio Massa, who has repeatedly stated that devaluation is the worst response to the economic crisis, had to accept again, the third timedevalue the peso to get the dollars that will help avoid a collapse of central bank reserves
Due to the drought, 65% less foreign currency entered the first quarter of 2023 than in the same period of 2022: $2.8 billion this year versus $7.925 billion in last year’s first quarter.
To get the $9 billion in reserve-strengthening severance payments, the government had to appeal to logic: pay more for a scarce commodity, i.e. dollars. Otherwise, the turnstile for imports -which is already pretty tight- would have fit much tighter.
Shutting down imports doesn’t come for free: it results in lower activity and more inflation. Due to the shortage of goods and because the importers will set their prices taking into account how much of their imports they have had to pay at the dollar value calculated with the liquidation.
If the same conditions that were applied to the two previous versions of the soybean dollar occur, the Treasury will have to compensate the Central Bank for the difference in price that will exist from next Monday between the official wholesale dollar -today at 218 dollars- and dollar agriculture, which, as Minister Massa said, It will trade at $300.
Compensation is for the simple fact that The central bank will pay $300 for every dollar sold by the farm and charge $218 for every dollar sold to importers. Economics expects soy liquidations and regional economies to reach $9 billion this way.
As an example, and to simplify why the wholesale dollar will rise between now and May 31st, for every $1,000 million settled through the agricultural dollar window, the Central Bank will disburse 300,000 million pesos. But for the dollars he sells in the Single and Free Market to importers, he will pocket 218,000 million pesos. The difference, i.e. 82,000 million dollars, is provided by the Treasury. If the mechanism applied for soybean dollars 1 and 2 is repeated, the Treasury will issue a non-transferable 10-year bill in dollars at a very low rate, which will be delivered to the Central Bank.
The IMF calculated that the fiscal cost of 1 and 2 soybean dollars was equivalent to 0.7 points of GDP in 2022.
Massa removes this “rabbit” from the species “exchange creativity” because he wants to avoid formalizing a complete devaluation at all costs, i.e. that exporters and importers have a single, higher dollar price as a reference.
The Government does not want to hear anything about it for now. He believes that with these initiatives he will lead to elections. Then another movie starts.
Source: Clarin
