The effect of the drop in dollar revenues due to lower exports due to the drought and early settlements is further intensified due to the imbalance in the services sector.
The BCRA Exchange Balance Services account recorded a deficit of US$866 million in March. It is the highest red since September last year, thus maintaining the growing trend that began after the first year of the pandemic. In this way, in the quarter the Services sector accumulates a deficit of almost US$2.25 billion, very similar to that of a year ago.
The March result was explained by net expenses for Travel, tickets and other card payments for US$463 million, then Freight and Insurance for US$372 million and Other Services for US$154 million. These movements were partially offset by net income from Business, Professional and Technical Services of US$123 million.
When analyzing the accumulated data for the first quarter, it is clearly understood why the technicians of the IMF they put the magnifying glass on the Services numbers, above all, on Freight and Insurance spending and why some measures were taken days ago. Those close to the negotiations say that during the last meetings in Washington in the middle of the Annual Assembly of the organization and the world Bank, the officials of the Fund questioned the Creole economic team about the high expense in foreign currency for Freight when in the rest of the world the cost of transportation had been falling since last September. Hence the new restrictions implemented by the BCRA.
The table for the first quarter shows that the strong imbalance in tourism and spending abroad and freight. Since on the side of the business, professional, technical and other services account, the balance continues to be in surplus, although in decline, since revenues totaled US$1,502 million (-5%) while expenses totaled u $s1,348 million (-1%). On the other hand, in trips, tickets and other card payments abroad, revenues totaled US$450 million (+394%) but expenses reached US$1,874 million (+28%). While on the freight and insurance side, revenues totaled US$116 million (-32%) and expenses US$1,089 million (-20%).
Regarding travel and tickets, the BCRA highlighted that in March, gross income for both concepts totaled US$159 million, which implies an increase of 261% year-on-year and explained that “said increase occurred within the framework of what is established by Communication “A” 7630 of the BCRA of last November, where, in order to boost foreign currency income from receptive tourism, it was resolved to exclude the income of funds with non-resident cards from the requirement of settlement in the exchange market, charges for tourist services contracted by non-residents and for charges for non-resident passenger transport services”. It is worth remembering that this allows recipients to apply a higher exchange rate to card purchases in the country by non-resident tourists. On the other hand, gross travel expenses totaled US$623 million, showing an increase of 6% per month and 11% year-on-year.
The other concepts that play in the services account show that the operations for primary income represented a net outflow of US$432 million in March, mainly due to net “Interest” payments of US$409 million. Within gross interest cancellations, US$292 million were made by the “General Government and BCRA”, of which US$235 million correspond to interest cancellations with international organizations (excluding the IMF), while the private sector totaled payments for US$169 million. Likewise, there were transfers of profits and dividends abroad for US$27 million. Lastly, secondary income operations showed a surplus result of US$25 million.