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The Central Bank transferred more funds to the Treasury and moves away from the IMF’s monetary goal

The Central Bank transferred more funds to the Treasury and moves away from the IMF’s monetary goal

He Central Bank (BCRA) This week it issued another $150,000 million as Transitory Advances (AT) to assist the National Treasury, as it was known this Wednesday. The amount was granted this Tuesday, just 72 business hours after delivering $140,000 million to finance the fiscal deficit. And analysts warn that this marks three issues: the departure from the goals of monetary issue and fiscal deficit of the Monetary Fund (IMF), the need for a review of spending for the State and the incidence of inflation. In addition, they point out that the Treasury debt tender this Wednesday will be key to these issues.

It happens that, first of all, clearly, this is bad news for the Government, which adds, thus, another failure to meet the IMF targets, after having failed to reach the reserves in the first quarter, since, probably, it will fail also the prosecutor in these three months, given that the Treasury had already consumed 99% of the assistance goal provided for in the agreement with the international organization for the first semester.

Until now, the Treasury had received other transfers for $100,000 million, on April 21, and for $130,000 million, on March 17. Thus, according to Juan Ignacio Paolicchi, from the Empiria consultancy, “they already used $520,000 million in the yearwhen the goal with the IMF until the end of June was somewhat below $373,000 million”.

The Treasury should repay funds to the BCRA

The economist Salvador Vitelli calculates that $670,000 million were issued directly in concept of transitory advances and indicates to Ambit that, “To the extent that you don’t return the shipment in the remainder of the current quarter, we’re looking at another goal miss.” According to his estimate, the goal for the first semester, and even for the third quarter, has been widely exceeded.

It should be noted, however, that the requirement is linked to the impact than drought had on the ability to collect taxes. That opens the possibility that this is one of the points contemplated in the renegotiation with the IMF that the Government is carrying out: a more flexible fiscal target. And it is that tax revenues, for a few months, have not even been able to keep up with inflation, which means that they have fallen in real terms.

Issuance: the effect on inflation

However, on the other hand, analysts from the City warn that it is counterproductive to accelerate the use of issuance in the midst of an inflationary escalation, which pushed the cost of living to 8.4% in April and they expect the upward trend to continue. hold for May and project an annual price evolution of around 165%.

And it is that Vitelli warns that, in the current highly inflationary context, “each price that ends up being issued goes to prices And it creates more pressure. Likewise, he comments that this shows a disaster in the fiscal accounts, which is far from the objective of the Minister of Economy, Sergio Massa.

“Increase the transitory advances is to turn on the weight printer”, the economist from Epyca Consultores Joel Lupieri opines in this regard in dialogue with Ámbito. And he foresees that, in this context, the increase in issuance is likely to add another factor of pressure to the already very high inflation expectations.

Financial weakness and debt tender

He warns that the State still spends more than it receives and affirms that this responds to the fact that, “with credit channels and taxes practically closed to continue increasing income, the only card that remains is the path of issuance.” Thus, according to his opinion, the Argentine state should move towards a deep restructuring, where the expenses correspond to the genuine income that is collected.

“The strong increase in AT in May reflects the weak financial position of the government”, says Jorge Neyro, chief economist at Delphos Investments. And he maintains that this is an indicator that “the sustained deficit can no longer be covered with debt placements, as in the first months of this year.”

The signal that it is giving is of problems in the public accounts, warns the economist and director of CyT Camilo Tiscornia, in the same sense. Also, you have to add the debt maturities that are coming in May and June“, mentions.

Consequently, Vitelli maintains that “It is key to see what happens today with the tender because, to the extent that it achieves a good result in net financing, it will be more feasible to return the advances to the BCRA”.

Source: Ambito

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