The field has been part of US$ 100,000 million since 2019 and Miguel Pesce doesn’t have it: where did they go?

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Between December 2019 and April 2023 the field injected $98,508 million into the economy.

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Meanwhile, virtually no debt to the IMF or private bondholders has been canceled -the first was refinanced, the second restructured-. It’s still Central Bank reserves decreased by approximately US$10,438 million.

So where did all that money from the field go, the $98.508 million?

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basically payable imports of industries (automotive, textile, energy), foreign travel, interest on debt and new loans of the economy.

The data was compiled by Martín Polo, economist and chief strategist at Cohen Aliados Financieros, based on foreign exchange market statistics published by the central bank on its website.

Argentina has accumulated a total trade balance (exports exceeding imports) of $46.733 million since the current government took office in December 2019.

Sector by sector, agriculture contributed a surplus of US$98,508 million. But there were others industries that have recorded deficits to manufacture and put their products on the road. Thus, the total balance is only US$46,733 million. For example the industry automotive sector recorded a loss of almost US $ 9,000 million e power 6,922 million dollars.

The $46,733 million of trade balance that the government managed to accumulate was used as follows:

– US$18,904 million was paid in service imports (eg $7.402 million in travel of the Argentines and US$7,565 million of cargo),

– US$ 21,489 million for the payment of interest on the debt (at the IMF, for example, US$5.086 million),

– Loans for US$ 19,381 million (the deficit of financial account is US$16,778 million and there was a favorable balance with the IMF until April).

All data is from the foreign exchange market reported by the BCRA.

Conclusion: reserves decreased by US$ 10,936 million.

Economist Fernando Marull tweeted a chart with similar figures for the week. His interpretation has triggered a political and economic debate.

The first is because the former president and leader of the opposition, Mauricio Macri, has decided to RT graphics.

Second, because such a liquidation of dollars by campaigns since 2019 challenges a proposition that both the government and related economists have repeatedly raised: Argentina’s problem is that it lacks dollars, they argue. But when you see that nearly $100,000 million has flowed into the country over the years, it intuitively seems that this statement is at least questionable.

Between 2019 and 2022, Argentina enjoyed terms of trade with export prices at historically high levels and yields they allowed agriculture to have a liquidation register. And all this despite the pandemic and drought.

“Also this year, and despite the drought, given international prices, the liquidation of agriculture It will not be much lower than in the 2015-2019 period”, says Martín Polo, of Cohen.

But again, what about the dollar shortage they talk about in the government and near you? Where?

“The idea of external tightening was mentioned in the 1980s when rates around the world were high, commodity prices were low and there was a debt crisisadds Polo. “Here you had everything in your favor except the pandemic. The countries of the world applied expansionary policies that year, in 2020, but then corrected. Here he continued to give his all”.

Another question that arises is Isn’t spending on energy imports inflated? delaying tariffs and thus encouraging their consumption above what Argentina can finance or relative to other parts of the world.

This is a proposition that the IMF staff and the countries on its board of directors make to Argentina. In other economies, households receive significant increases in bills.

Haroldo Montagu, former Secretary of Economic Policy between December 2019 and the beginning of 2021, and academic coordinator of the Phoenix Plan, underlines the circumstances in which the dollars that campaigns have left in the economy have been consumed in recent years. “Prices for services have skyrocketed with the pandemic. The 40-foot container went from $1,600 to $10,300 and is returning to pre-pandemic levels this year alone.”.

Furthermore, adds Montagu, “the recovery of the economy has boosted imports and their elasticity”. Imports to GDP in 2022 were higher than in 2019, Macri’s last year. The economy grew by 5.2% in 2022.

“The concept of external restriction does not only respond to the availability of dollars but to the productive structure of the country. For orthodoxy, this restriction is resolved by increasing the price of the dollar,” says Montagu. “For heterodoxy, it’s about generating mechanisms so that those dollars go to the reserves.”

According to Polo, what Montagú says is not that simple. In fact it hasn’t worked in these years.

“Argentina’s biggest problem is exchange controls. Although prudent regulation of capital inflows is good, when this spiral of restrictions is entered without prudent fiscal policy, the result is always the loss of international reserves, since the exchange rate differential generates the opposite incentives and puts pressure on expectations exchange rate adjustment”.

Almost four years later, Argentina has negative reserves and is asking the IMF and China for money.

Source: Clarin

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