According to the official page of the Banco Centrallas gross reserves reach US$ 27,926 million as of June 30, one of the levels lowest in history. This situation is explained by the strong drought which implied a drop of nearly US$ 20,000 million in exports, but that is not the central reason, as the Government tries to hide.
behind the foreign exchange shortagewhich strongly pushes up the internal pricesone finds orientation of the economy to honor the debtwhich will deepen in the coming years when the largest maturities have an impact.
The truth is that if the gross reserves are few, even fewer are the reserves considered “net”, which approximates the “power of fire” that the BCRA has to intervene before a bullfight. This is the variable that the IMF closely monitors and whose calculation does not include the swap with China (currency exchange for some US$ 18,000 million), the dollar deposits of private banks in the BCRA and other debts. Economists calculate that the account drops to zero for some US$ 5,000 million.
Last Friday the reserves had suffered a blow when, “celebrating” that it was not paid with dollars, the Government made the payment of U$S 2,700 million equivalent in DEG (IMF currency) and available yuan, to the International Monetary Fund (IMF). As expected, regardless of the currency, it is an outflow of resources that decreased the coffers of the Central to pay an illegitimate and illegal debt contracted by the macrismo.
The private bondholders of the debt restructured by Guzmán return
Added to this situation is now the announcement by the Ministry of the Economy, which confirmed that it will pay the coupons for the restructured dollar bonds by Martin Guzman in 2020. These add obligations for some US$ 1,000 million. In the middle of the pandemic and with the economy in a severe crisis, the former minister carried out a debt swap that, without investigating it, validated the previous commitments, of a debt with many fraudulent chapters. Now Sergio Massa are willing to pay them.
“According to the usual schedule, we will be making the payment of coupons of the titles denominated and payable in foreign currency. In this way, we once again reaffirm our commitment to the payment of public debt obligations and the management of a financial strategy that allows us to provide peace of mind and certainty to the markets”, said this Tuesday morning the finance secretary, Edward Setti.
The estimated total amount of payments is USD 982 millionof which according to estimates by the economist Salvador Vitelli expressed to Infobae, just over US$ 200 million corresponds to the GD38 global bond and a little less than that figure, to GD41.
According to Martín Rapetti, executive director of the consultancy balances“with the recent payment to the IMF and with the one that will be made on July 9 for some US$ 1,000 million corresponding to the service of the debt in bonds, the BCRA will have within a few days a level of negative net reserves of more than US$ 6 billion, the lowest level we can remember.”
“In this way, the margin of maneuver available to the authorities is very limited, with net reserves at – US$ 5,200 million and cash reserves at + US$ 1,936 million, so that the exchange risk remains high and “want” it is not always “power”, “said a report by the Capital Foundation, chaired by Martín Redrado.
Negotiation with the IMF, in search of “stuck” disbursements
Within this framework, this Monday an Economy delegation left for Washington to continue negotiations with the IMF. The delegation -which will not have the presence of Sergio Massa- was headed by the Vice Minister of Economy, Gabriel Rubinstein. They are looking for the disbursement of US$ 4,000 million to be released, and they are also trying to get an advance of fresh dollars to cushion the weeks that remain until PASO, something that analysts see as unlikely.
He Friday there would also be a vgrant of US$ 1,300 million to the IMF which will further sink reserves and reduce the room for maneuver to keep the dollar in check. Some analysts believe that this payment can be postponedas happened with the last month of June, which would be on the negotiation table this week. Until the end of the year Maturities with the Fund total more than US$ 10,000 million.
The expectation is also that Massa, with the economy on his neck as a candidate now for president for Peronism (Union for the Homeland), is preparing new “patch” measures to stretch the agony of reserves. Although better weather conditions are expected towards the second semester, the implementation of a “soybean dollar 4” is not ruled out. With the three previous versions, the candidate, a friend of big employers, has already transferred some US$ 500,000 million to agriculture.
There is also speculation about some kind of tax on imports or an exchange rate split in services (tourism, software and others), a kind of segmented “devaluation”, but it would imply a rise in the exchange rate gap and an inflationary impact.
All these measures for “put up with” with few reservations, which does not rule out that there may be races y abrupt changesThey do not seek to solve the great problem of inflation nor the critical social situation that millions of working families.
Massa’s and Peronism’s plan is to continue complying with the IMF, something that will only deepen backwardness and national decline. It is necessary to reject the agreement with the Fund and sovereignly ignore the illegitimate and illegal debtalong with other measures such as the nationalization of banks and foreign trade under the management of workers, to turn priorities based on social needs.