The Central Bank’s (BCRA) current account recorded its largest deficit in more than a year in July (since June 2023)The normalization of import payments, the exchange rate appreciation and the commitments of the National State with private creditors were the factors that explained this result, which impacted reserves.
According to the data of the foreign exchange balance published this Friday by the BCRA, Reserves shrank by US$2.62 billion during the seventh month of the year. Most of this loss of foreign currency had to do with the “red” in the current account, which amounted to US$1.668 billion.
“The second semester is always more complicated for reservations. August was an atypical month (there was a delay in imports awaiting the reduction in the PAIS Tax), but it ended less atypically in recent days,” he clarified to this media. Gabriel Caamano, economist at Outlier and consultant Ledesma.
The three causes that accentuated the current account deficit in July
Among the components of the current account, the greatest negative impact in July was had by the debt interest payments, which totaled some US$1.901 billion, the highest figure since January: US$1.375 billion corresponded to the payment of the bonars and global bonds, securities issued in the last debt restructuring, led by the former Minister of Economy, Martín Guzmán.
In second place was the Negative result of the balance of services, which was US$566 millionthe highest since November 2023. The greater outflow of dollars from tourism abroad explained the bulk of this amount.
It is worth remembering that this week the INDEC reported that The arrival of foreign tourists fell by almost 20% annually in July, while the exodus of residents abroad, mainly to Chile, soared. This, in turn, occurs within the framework of the exchange rate appreciation that Argentina has been experiencing in recent months: according to the BCRA itself, the multilateral real exchange rate is currently the second lowest since 2017, only surpassed by the level of November last year, prior to the devaluation of the Milei Government.
Besides, Although the balance of goods was positive by US$551 million, it was the lowest balance since June 2023when the previous Government began to deepen the postponement of import payments. In effect, the normalization of these payments generated a strong reduction in the gap with respect to export income: last month Almost 95% of the external purchases registered by INDEC were paid forwhen that ratio reached just 17% in December.
Finally, it is worth highlighting another component of the exchange rate balance that affected the fall in reserves, outside the current account. This is the item called “purchase and sale of securities”which includes the sale of foreign currency on the stock exchange that the Central Bank has been carrying out to lower the price of financial dollars and thus narrow the gap. In July, around US$326 million were transferred via this route and that number is expected to increase in August.
Is there any driver that could predict an improvement in bookings by the end of the year?
Looking ahead to the rest of the year, Caamaño pointed out that Money laundering as the main driver that could lead to an increase in net reserves“The IMF estimates that money laundering will raise 0.3% of GDP, equivalent to around US$1.5-US$1.8 billion,” he added.
Source: Ambito
