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the fact that alarms the Government

Las imports of the month of May that just ended they broke all the records: would have exceeded $7.7 billion, according to the preliminary estimate made by the Government. If so, the peak of more than a decade ago was surpassed: in August 2011, imports had climbed to US$7.61 billion.

The closure of May implies, then, an increase of 50% in relation to May 2021. There are multiple reasons that explain the extraordinary jump in imports.

The most relevant of all is linked to a pernicious fact: the hefty payments for energy importsthat the Government must face in the midst of the soaring prices of liquefied gas and fuels. Especially diesel, which are typical at this time of year.

Everything occurs in a context that should be favorable for Argentina: since the beginning of the year, the liquidations of cereal exporters they totaled $15.33 billion, an all-time record. They represent exactly US$2 billion more than the same period last year, which in turn had been a record.

However, this truerain of dollars“It passes by the Central Bank: since the beginning of 2022, it has only been able to buy US$780 million. In fact, between Tuesday and Wednesday, the BCRA’s trading desk was forced to sell US$205 million to meet the demand of foreign currency (among which we must include payments for the purchase of energy) and avoid a devaluation jump.

The new import record implies a strong outflow of dollars.

Without dollars, will it be necessary to request a waiver from the IMF?

Such a weak streak could most likely lead to an apology to the IMF for failure to meet the next quarterly goal, which ends on the 30th.

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To meet the goal signed with the IMF, the Central Bank should buy around US$2.6 billion during June. At the rate of $130 million daily. A complicated goal, if you take into account what happened in recent weeks.

But not everything is the Fund: the most important thing in the current context is that the Central Bank is unable to appropriate the liquidations of the cereal companies, which have been growing in relation to what happened a year ago. What was said above, the fact that the BCRA fails to capture foreign currency upsets investors.

In fact, in the Casa Rosada nervousness reigns for this question. The calls to Guzmán and Miguel Pesce intersect daily to find out in detail what is happening in the stress exchange market.

To avoid greater evils, this dynamic should change completely in the coming weeks.

Argentina, ever closer to being forced to request a waiver from the IMF.

Argentina, ever closer to being forced to request a waiver from the IMF.

Imports: the reasons for a record

The record of purchases abroad is related to different events, some seasonal and others that have to do with the exceptional moment that the world economy is going through.

1. Energy payments at record prices

What has happened in recent weeks is a symptom of what is happening: los energy payments They take a good part of the foreign currency that the BCRA acquires from the cereal companies.

The explosion in gas prices has a lot to do with that loss of greenbacks.

A look at the latest official figures account for this phenomenon. During the first four months of the year, energy expenses totaled US$3,583 million, 157% above the January-April 2021 period. It implies a jump of US$2,188 million that the Central Bank had to pay as a surcharge for gas imports.

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The price of LNG, which a year ago cost US$8.33 per million BTU, came to quote around US$34.50. Four times more expensive.

The cost of LNG skyrocketed and impacted reserves.

The cost of LNG skyrocketed and generated an impact on reserves.

2. International inflation

The global price rise It was already complicated by the pandemic -basically due to the rise in logistics costs-, and which has now worsened due to the war in Ukraine. Europe and the United States suffer the highest inflation of the last 40 years. Conclusion: to bring the same amount of merchandise, businesses need more dollars.

3. Taking advantage of the gap by companies with access to the official dollar

Importers buy “all they can” at the price of $120 (official wholesale dollar), which is compared to the $211 that is worth the cash with liqui. A gap of 76%. Nothing less.

4. Improvement in economic activity compared to last year

The latest data from INDEC show a growth of 6% year-on-year (in March) in the economy. It is known: for each point of expansion of the activity, imports do so by at least three points.

Reserves are not growing at the expected rate and fears of a foreign exchange episode are growing.

Reserves are not growing at the expected rate and attention is growing on the foreign exchange market.

Maximum concern for the dollar

For Guzmán-Pesce, the lack of foreign currency buying power can bring them headaches: in the exchange market an incipient dollarizing wavewho was absent in the previous weeks.

It is clear: the different actors of the economy are on alert: they watch with extreme attention the movements of the Central.

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Official pressure moves to the exchange marketwhere prices are very sensitive to the achievements (or failures) of the monetary authority.

The quotes of the free dollars are kept on a tolerable path, but in the official offices they began to worry by, as noted above, the dollarization trend. These are investors, but above all companies, that dollarize portfolios but also struggle to enter the foreign exchange market by stocking merchandise in the official foreign exchange market.

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