The government has three months left to take advantage of the favorable price of raw materials and get the Central Bank to accumulate international reserves. will it?
As of August, due to seasonal reasons, the liquidation of agricultural exports falls and generally the demand for dollars in the economy exceeds its supply.
That is why, until then, the government must ensure that the positive balance of dollars, mainly in the oilseeds and cereals sector, more than offsets the net demand for foreign currency made by almost all the other sectors.
During the first quarter its contribution was 8,650 million dollars, 18 percent higher than the same period last year.
The problem is that 80 percent of those extra dollars that came in this year served to offset the increase in the energy deficit. Mainly in Electricity, which reached -1,280 million dollars.
Although the figures are not yet available, the macro aggregates show that this situation was repeated in April and will continue in the coming months of the year where energy consumption grows.
It is clear that the jump in the price of raw materials at the international level operates positively in the economy through agriculture, more dollars from exports and higher tax revenues from withholdings, but also negatively in the energy sector, higher Outflow of foreign exchange due to imports and increase in fiscal spending on subsidies.
Therefore, the tariff and energy import scheme that the government ends up defining in the coming months is decisive.
However, the impossibility of accumulating dollars by the Central Bank is also related to the high level of imports from the rest of the economy and not only from the energy sector.
For example, without including the latter, purchases of goods abroad grew 23 percent. With strong increases in important items such as Trade (+39 percent) and Chemical and Plastic Industry (+29 percent).
The explanation lies both in an economy that continues to grow and managed to reach low unemployment levels -beyond the quality of jobs created- but also in speculative components.
In a context of exchange rate control and with inflation that accumulated 16.1 percent during the first three months of the year, families and companies continue to seek to dollarize their surplus pesos through purchases of durable and semi-durable goods.
In turn, importers accumulate stocks for the same reason and fear of greater restrictions to import in the future.
For example, the purchase of semi-durable consumer items abroad grew 62 percent in the first quarter of the year compared to the same period in 2021.
Consequently, to accumulate dollars in the next three months and stabilize the economy, the government will have to fine-tune the energy sector and also cancel the speculative component in imports from the rest of the economy.
It is not an easy task, its success depends on responding to an increasingly complex international and local situation with a credible economic program backed by the entire government coalition.
If the equilibrium in the foreign exchange market fails, it will occur by sacrificing economic growth as a result of an acceleration in the level of devaluation and/or deepening of the exchange rate trap in the productive sectors.
Director of Analytica Consulting
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
