Javier Milei’s Government reached the first month of its mandate issuing more than $6 billion. In these first 30 days, the Central Bank stopped issuing pesos to finance the Treasury directly and indirectly. However, it had to continue issuing to meet commitments including the payment of interest on its remunerated liabilitiesthe purchase of currencies, the rescue of levids and the execution of bank puts.
According to the consulting firm Eco Go, these reasons implied an expansion of pesos issuing more than $6 billion. It is worth clarifying that the report is for the entire month of December.
That number, detailed from the firm, covers the $2 billion expansion due to foreign currency purchases to the private sector, $2.4 billion for interest on remunerated liabilities and others $2.4 billion due to other factors, among which are the puts exercised public securities in pesos and the Lediv that returned to pesos.
How was the behavior of the monetary base in December
Eb contrast, for the repurchase of public securities from the Central and the purchase of foreign currency, the Treasury absorbed $2.1 billion net. In reality, he details, it absorbed more but that greater absorption was compensated by the departure of pesos from deposits to finance the deficit. And along those lines, he noted that the Another contractionary factor was the passes that took $4.1 billion from the base.
TO Throughout the month the behavior of the Monetary Base was not homogeneous. Through their December Monthly Monetary Report, published on Monday, the new Central Bank authorities expressed that “Prior to December 10, there was an expansion of the Monetary Base for $1.2 trillionmainly explained by the unwinding of remunerated liabilities and, in part, by the execution of put option contracts (put option) on National Government securities”. These expansion factors, they added, were partially offset by the net sale of foreign currency to the private sector.
The official BCRA statistics They also show a endogenous emission to pay interest on remunerated liabilities for $2,118 billion in that same period. They are about $132.3 billion on average per business day, although the figure could have been much higher had it not been for the Government’s decision to dismantle the Leliq stock and lower the monetary policy rate to 100%.
What is the strategy of the Central Bank
According to a recent report by the consulting firm PxQ, the strategy consists of three parts:
- Eliminate monetary financing to the Treasury. In the first quarter this will be easy to achieve given the seasonality of the deficit.
- As of January 11, the stock of leliqs will be zero and all remunerated liabilities will be overnight repos that pay an effective annual interest rate of 171.5%. For the BCRA this means a lower issuance of interest and for the depositors a liquefaction in real terms.
- We will seek to absorb weights (many coming from the dismantling of LEDIV) with BOPREAL.
Monetary issue 2024: what to expect
According to EcoGo, andl stocks of paid liabilities It will contract from 8.2% of GDP in December ($26.5 billion) to 4.6 points of product ($23.3 billion) in March of this year. Measured in dollars, the consulting firm estimates that in that same period they will go from US$41.3 billion to US$27.5 billion at the official exchange rate, or from US$27.9 billion to US$19.9 billion at the CCL.
From LCG, for their part, they add that facing 2024 that has just begun, without direct assistance from the BCRA to the Treasury to finance the fiscal gap, it will remain to be seen if the interventions in the debt market until the acclaimed fiscal convergence occurs. In parallel, we understand that the monetization of the trade surplus achieved will be sustained, although if the exchange rate begins to lag, the numbers could be somewhat lower. On the other hand, the new composition of the Financial sector, Adding the drop in rates casts doubt on its behavior for the coming months.
Source: Ambito
