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The trade balance will be positive in 2024 but it will not be enough to cover the financial front

The trade balance will be positive in 2024 but it will not be enough to cover the financial front
December 10, 2023 – 9:00 p.m.

This is how the specialists consulted by Ámbito define it. The countryside, mining and oil and gas appear as sectors that will reverse the trade balance during the coming year. However, a favorable external outlook will not be enough to cancel financial obligations. They anticipate debt.

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In his inaugural address, the president Javier Milei warned about the high levels of debt both in foreign and local currency: there are US$520,000 million between importers, retained earnings, BCRA, YPF and the Treasury, plus US$25,000 million with multilateral organizations and the equivalent of US$90,000 million for maturities in pesos , he assured. In that context, In 2024 the balance of the trade balance promises to be positive and serve as an incentive against external obligations. What are the estimates for the sectors that make up the export matrix.

Much of the expectations fall mainly on the primary activity, the Argentine jewel, which for Milei will be positive considering his demand for the international division of labor in his speech. “The exchange balance in 2024 will be favored by the projection of a trade balance that would go from negative to positive territory, driven mainly by the rebound in agricultural exports hand in hand with the recovery in harvest volumes, along with the reversal of the energy balance deficit”says the consulting firm EcoLatina in one of its latest reports. The news is favorable considering especially the 35% drop in the agricultural sector, with a drought that generated more severe effects than that of 2009.

In any case, for Gustavo Idígoras, president of the Chamber of the Oil Industry of Argentina and the Center for Cereal Exporters (CIARA-CEC), the fruits will not be seen in the first instance. “We are going to start a summer that is still dry because it did not rain when it should have started,” which cut the estimates for wheat and barley, accumulating approximately US$4.5 billion between them. A good corn and soybean campaign is expected, projecting US$8.5 billion and US$20 billion respectively. “Argentina will have a foreign exchange income of approximately US$30,000 and US$32,000 million. We are not going to be like the US$40,000 million we had the previous year, but neither will we be with the US$19,500 this year, which has been disastrous,” Idígoras projects about the activity that generates more than half of the external sales of the country.

Another of the sectors that they assure will continue to be thriving is that of Oil and Gas, with the non-conventional production of Vaca Muerta driving the activity. A base scenario carried out by the energy consulting firm Aleph Energy is a trade surplus of US$3.5 billion in 2024, and almost US$25 billion in 2031. The improvements would be a direct consequence of the transportation expansion works. , generating increases in exports or foreign currency savings. Until now, Milei has proposed eliminating state intervention in development works and turning to a “Chilean-style” private model. It is estimated that oil exports will increase from US$3,473 million to US$5,033 million and, thanks to the Néstor Kirchner gas pipeline, LNG imports will increase from US$1,795 million this year to US$501 million.

The mining It will also take center stage during the first year of Milei’s management. It is the sixth export complex nationwide that generates almost 100,000 jobs directly and indirectly. For this year, the sector will have a level of exports of almost US$4.5 billion, of which 25% corresponds to lithium sales. Lithium production has been growing uninterruptedly for two years and by 2023 it will reach 55,000 tons, thus exporting 40% more than in 2022 from the productive triangle: Jujuy, Catamarca and Salta. Come 2031, the sector estimates that exports could grow to US$15 billion annually and generate 80% more jobs.

However, for the head of Research at Ecolatina, Santiago Manoukian, The wealthy inflow of dollars will clash with the country’s financial obligations, producing a deficit in the BCRA accounts.. “The need to rebuild a stock of international reserves at historic lows (less than US$11 billion), debt payments in dollars with the private sector; delays in the remittance of profits and dividends; and the growing commercial debt with importers means that the positive trade balance is not enough to cover this deficit in the balance of services and remission of income abroad,” he explains in dialogue with Ámbito.

In that sense, Milei yesterday detailed that the debt exceeds US$30,000 million with importers and the profits retained from foreign companies reach US$10,000 million. She assured that “the debt of the Central Bank and YPF amounts to US$25,000 million and the debt of the Pending Treasury adds up to an additional US$35,000 million.” In that account “nearly US$420,000 million of already existing debt will have to be added” during the administration of Unión por la Patria. In turn, debt maturities in pesos are equivalent to US$90,000 million and another US$25,000 million correspond to debt with multilateral credit organizations. “With financial markets closed and the agreement with the IMF fallen due to the brutal non-compliance of the outgoing government, the debt roll over is extremely challenging, even for the mythical cyclops,” the president concluded on this aspect.

Anyway, for Manoukian The greater inflow of foreign currency will contribute to an ordering of the exchange front that would lead to a smaller gap, an improvement in the real exchange rate and fewer restrictions.. However, in 2025 debt maturities in foreign currency will double, which is why “the exchange rate will have to be unified and access international credit markets again at some point,” according to the economist. Meanwhile, he considers “good news” a support agreement in currencies during the stabilization process and an agreement with the IMF that frees net payments during the next year. The same is considered by the specialist Joel Lupieri, who warns that only until April will US$10,000 million have to be paid and, therefore, “they will have to seek financing immediately, because the BCRA reserves and genuine resources today are zero.”

Source: Ambito

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