According to the text agreed upon with the IMF, the exchange policy will remain “invariable” with respect to the previous year, while it is proposed to “gradually relax exchange controls”, but the plan to dismantle it will only be known at the end of the year.
crawling peg
In relation to the exchange policy, the “crawling peg” will continue, that is, the controlled devaluation. The document highlights that “we will calibrate our management of the exchange rate to guarantee the competitiveness of the real effective exchange rate in the medium term, and we will encourage the accumulation of reserves.”
“To this end, and to help achieve reserve accumulation targets under the program, the official exchange rate adjustment rate will keep the real effective exchange rate in 2022 broadly unchanged from current levels.” of 2021, in order to preserve competitiveness,” he anticipates.
The Government undertakes “in view of the exposure of Argentina’s balance of payments to the volatility of commodity prices, it may be necessary to consider aligning our reserve accumulation objectives, in communication with the technical staff of the IMF”.
Likewise, interventions in the official exchange rate market “will be consistent with our objective of accumulating reserves, and will take into account the variability due to seasonal factors and temporary episodes of excessive volatility.”
Stocks to the dollar
In points 26 and 27 of the agreement with the IMF, it refers to the capital flow management policy, specifying that “capital flow management measures will continue to be a basic component of our set of tools and will have to be recalibrated based on of changing circumstances”.
The end of the stocks on the dollar will not be immediate. The schedule and characteristics of the relaxation of the stocks on the dollar will only be known at the end of December 2022, when the “strategic roadmap” is published.
And furthermore, it will not be a total elimination of the measures that restrict access to the dollar in the exchange system. “The strategy will consist of converging towards a system of macroprudential regulations, which promotes stable and sustainable capital flows,” recalls the memorandum on the stocks.
In the memorandum, the Government recalls that “certain regulations that limit the negotiation of securities in foreign currency” were eliminated, and the document also points out that “as conditions are normalized, we will try to make regulations on import payments more flexible to support the recovery economic”.
As for the gradual elimination of the clamps on the dollar, the text of the agreement indicates that it plans to “draw a strategic roadmap to gradually relax exchange controls, describing the necessary conditions and objectives, also with a view to supporting the gradual restoration of the access to the international market from 2025”.
But he clarified that the lifting of the dollar clamps “will be prepared in communication with the technical staff of the IMF, will be based on pertinent experiences of countries, taking into account factors specific to Argentina, such as the profile of its public debt, the coverage of reserves and the high degree of dollarization”.
Source: Ambito
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