In the second quarter of the year, Argentines’ holdings of foreign assets grew again, but there were some changes in the composition of the portfolio. In any case, cash and deposits represent almost 10 times the BCRA’s gross reserves.
Argentines’ dollar holdings outside the local system are always a topic of debate, especially in times of money laundering and lack of reserves from the Central Bank (BCRA). The truth is that according to the latest official data, Total wealth in foreign assets grew in the second quarter of the year to $450.76 billion. That is why there is always talk of the paradox that Argentines go to ask for alms from international financial organizations to face balance of payments crises, and yet, they have outside the system the equivalent, more or less, of a GDP of according to the different estimates.
According to the latest National Accounts report corresponding to the Balance of Payments, International Investment Position and External Debt of the INDEC, as of June 30, the total foreign assets, which are owned by residents, are estimated at US$450,760. millions. But of that amount, US$261,703 million correspond to Currency and deposits, that is, they are the dollars and other foreign currencies that Argentines have, vulgarly, “under the mattress” or in safe deposit boxes and abroad. That sum has not increased, in fact, it has actually decreased so far in the libertarian administration given that at the end of 2023 the holding of currency and external deposits was US$262,080 million.
In any case, such a sum of external resources gives an idea of the magnitude of the potential investment capacity for the Argentine economy. Although, it is worth noting that in the last five decades part of the returns generated by these funds come to cover domestic expenses, to take advantage of some plausible season of “carry trade” or even to make a certain investment, for example, real estate. Today, Suffice it to mention that this mass of funds represents no less than almost 10 times the gross reserves of the BCRA, which in net terms remain in negative territory, far from the goal agreed with the IMF.
Now, in addition to the holding of Currency and deposits, the INDEC counts as part of the external assets of Argentines US$57,540 million of Capital participation and participations in investment funds for Portfolio Investment, another US$51. 058 million of capital participations from direct investment, plus debt securities from portfolio investment for US$36,301 million and reserve assets for US$29,022 million. The data arise from the so-called International Investment Position (IPI), by functional category and financial instrument at market value from the latest INDEC report.
Dollars under the mattress: what the numbers were like before the Milei era
What were these numbers like before the libertarian advent? It was already mentioned that the holding of Currency and deposits amounted to US$262,080 million while the Capital participation and participations in investment funds by Portfolio Investment was US$55,094 million and the Capital participations by Direct Investment of US$49,539 million, plus Portfolio Investment Debt Securities for US$34,375 million and Reserve Assets for US$23,073 million. So, heThe external assets of the IIP rose but the holdings of Currency and deposits were reduced and the Capital Participations grew both in direct and portfolio investment and also the holdings of bonds, and reserve assets.
But since not everything is rosy, The total of external liabilities reached US$370,259 millionwhich according to INDEC, are mainly explained by Loans estimated at US$109,806 million, in Capital Participations at US$109,377 million; and Debt instruments for US$56,045 million (“these last two correspond to the functional category Direct investment”, clarifies the INDEC).
Regarding the issue of external debt, the report indicates that the stock of total gross external debt with debt securities at residual nominal value as of June 30 was estimated at US$286,881 million, which is US$2,762. million than the previous quarter. “This decrease was mainly due to the drop in the indebtedness of the general government sector for US$2,486 million.
While the sectors Non-financial corporations, households and NPISHs and Deposit-taking companies, except the Central Bank, also decreased their debt by US$1,030 million and US$358 million, respectively. Other financial companies showed a decrease in debt of US$131 million. “In contrast, the Central Bank’s debt increased by US$1,243 million”highlights the INDEC. Thus, the stock of total gross external debt with debt securities valued at market value was estimated at US$248,378 million, and registered a reduction of US$378 million compared to the previous quarter. Like the aforementioned behavior, the stock of gross external debt of the Non-financial Corporations, households and NPISH sector decreased by US$989 million, while the debt of Deposit-taking Companies, except the Central Bank, decreased by US$364 million. millions. Other financial companies showed a reduction in debt of US$131 million. While the indebtedness of the Central Bank and the general Government increased by US$911 million and US$194 million, respectively.
Source: Ambito
