“And this measure is going to have an impact on the level of activity. The quotas are being reduced, when there were already problems with the quotas because they did not take into account that since last year there has been high inflation in the world, especially in many inputs, with which the increase in the quotas that had been given before to import, it did not even cover increases in the prices of those inputs. In other words, it implied importing less to produce more. There is already a very clear restriction for the level of production of a company. And now if they reduce it further, it will be able to produce even less”, added the economist.
“On the other hand, ordering a company that in order to buy its inputs it has to borrow abroad, while they are going to sell foreign currency to other smaller ones, honestly, it seems to me to be discrimination that should even be brought before the courts. Because it is not the same to have the dollars at the official exchange rate today, than to have them -in addition to paying interest- in the future. If they give it to you,” said Abram, who added: “Many companies are being forced to compete at a disadvantage with other companies that will have access to BCRA foreign currency. This regulation is going to generate a restriction on production in those companies that have to run these risks or higher costs for having to finance these imports of inputs.”
“This is a trap for production and investment. And that always leads to less growth: above all, because over time patches like this are put in place, which make the productive sector work worse. And that is going to have a cost in the level of activity for sure,” Abram stressed.
For his part, the economist at Equilibra Lorenzo Sigaut Gravina pointed out that from the consultancy they expected lower growth for this year “because, in part, they did not reach the dollars.” “And what we saw in the first months is that the activity maintained the levels of last year, but imports grew a lot. And net reserves, which should have grown or increased significantly, did not. Our vision was that it was not possible to grow 4% and accumulate US$5.8 billion in net reserves. That is not compatible, ”he remarked.
“What we are seeing is that, effectively, in the first semester the Central Bank has lost too much foreign currency due to imports and that today it is accumulating very few reserves. And between now and the end of the year, to protect those reserves, imports will have to be severely restricted and this will obviously have a negative impact on activity and inflation,” added Sigaut Gravina.
Analysis
For his part, the director of Analytica, Claudio Caprarulo, pointed out that from the consultancy they maintain the growth projection of 4% for this year: “Because we discounted that in the second half of the year growth was going to find a limit in the availability of dollars to import, and obviously in inflation”.
In this scenario, the economist argued that “if the measure is well implemented and affects only imports that were made as a value reserve, it may have a marginal impact on activity levels.” “Having a record of imports in the fragile situation that Argentina is going through was not sustainable,” added Caprarulo, who explained: “The most negative thing is about inflation, it is expected that the replacement cost of imported goods and services will increase and move at the final price. It is a variable to follow closely.
“On the other hand, the measure is in line with containing the adverse effects of once again having an exchange rate gap close to 100%, but it also has the effect of putting a high floor on it. It is important that the companies that have surplus pesos and now see their ability to import limited, the government offers them instruments so that they can maintain the purchasing power of their surpluses,” concluded Caprarulo.
Source: Ambito
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