The only certainty is that there are no dollars for everyone

The Central Bank’s “A 7532” communication is the last line of resistance in an attempt to avoid a devaluation of the official exchange rate in the coming months. In a forecasted turbulent second half, with falling reserves, persistent inflation and financial instability, the size is not surprising.

What do you import payments they grew by 35% until May Regarding a year ago is it or is it not a “festival” (CFK dixit), it is questionable. But an unfortunate combination of factors makes this rate of growth impractical for the sustainability of external accounts and compliance with the reserve target agreed with the IMF.

On the one hand, for more than a year, the exchange rate gap has encouraged companies to dollarize indirectly advance external purchases supplies, capital goods, raw materials, with foreign currency at the official value. Since they cannot do this if they have acquired financial dollars (CCL or MEP), the escape route is imported. Furthermore, in recent months, the acceleration of inflation and the few hedging alternatives in pesos have raised expectations of devaluation, strengthening the incentives to import.

To this dynamic generated by the gap were added the new prices of energy imports after the war in Ukraine and, obviously, the unforced errors of the same government, such as the delay in the construction of the Vaca Muerta gas pipeline, and the increase in logistics costs. since the exit from the pandemic.

With the provision, the treatment of goods with LNA (non-automatic licenses) and payments for services is equal to that of import LAs (automatic licenses). The government supports it productive activity will not be affected because the flow of inputs, parts, pieces and capital goods necessary for local production, included in the AL, which is equivalent to 85% of total imports, is not altered.

Instead, the requirements for goods with NTL change (the remaining 15%) and in particular for services, whose account does not stop growing. Net of freight rates, in the first 5 months it increased by 90%, tripling travel and credit card payments ($ 2.2 billion). Now this universe will need funding for at least 180 days to be able to access the official dollars later.

The scheme was designed by the government in five premises.

1) It is not devalued. 2) Economic activity does not contract. 3) It is temporary (three months). 4) Energies and medicines are excluded. 5) Those who import will have to obtain additional funding if they exceed the available ceilings. The feasibility of many of them is questionable.

What is clear is that the rigor of imports adds difficulties to private decisions. Will there be financing, commercial, banking, for who wants it? At what rate, with a country risk installed at 2,500 basis points? With what dollar to project the replacement cost? With cash with liqui? With an intermediate between the financiers and the official one, a kind of “heavenly” dollar?

Among exporters, how to ensure an adequate flow of inputs in the new scenario? Those who dismantled portfolios of pesos securities for 15 days to enter money marketWhat attitude will they take in the face of the new levels reached by financial dollars?

With pricing decisions based on the evolution of the dollar, the conditions are right new cost pressures of companies that will add a few more points to inflation. It is possible that there are shortages of products, greater friction in trade negotiations abroad. And for those who don’t get funding, available pesos that will put pressure on the price of financial dollars.

A decisive semester for economic policy begins, in which the management of expectations and the few tools available to the Government will define the format of the last year and a half of management. With one certainty: there will be no dollars for everyone.