Trade in services with the rest of the world continues to be a source of foreign currency drain. The protagonists are once again the same, perhaps encouraged by the real exchange rate. The statistics are muddied by the dollar blend.
Foreign trade linked to the services sector once again played against the Central Bank’s (BCRA) reserves, registering a deficit of US$566 million last July, which represents an increase of 54% monthly and 72% year-on-year. This is reflected in the Services account of the BCRA’s Foreign Exchange Balance for the sixth consecutive month, being the highest of the last nine months. Thus, the accumulated balance in the first seven months of 2024 shows a deficit of US$1,811 million, still much lower than that of the same period last year before the elections.
As for the July result, official data show that, once again, It was the net outlays for travel, tickets and other card payments that determined the red for the month with a negative balance of US$634 million. Secondly, there are transactions linked to the Freight and insurance with a deficit of US$119 million and finally the Others concept with a deficit of US$72 million. The result was not worse thanks to, as has been the case since the pandemic, Net income from Professional and Technical Business Services amounted to US$259 million.
It is worth remembering that, just like exports of goods, up to 20% of service exports can be brought into the country through the stock market within the framework of the Export Increase Program (PIE) so that their year-on-year comparison is complicated because that 20% does not appear in the statistics of the exchange market and exchange balance. Of course, there is an exception and it is the collections that are received and deposited in local accounts in foreign currency for later settlement in the stock market, which are recorded as exchange operations, with no net effect on the exchange market, according to the BCRA.
Other data from the BCRA Services accounts
On the other hand, Primary income operations represented a net outflow of US$1.67 billion in Julyexplained by net interest payments of US$1,652 million and net outflows of profits, dividends and other income abroad of US$17 million. As for gross interest payments, the Government and the BCRA totaled payments of US$1,614 million, Of these, US$1.402 billion corresponded to interest payments on foreign currency government bonds and US$213 million to interest payments to international organizations (excluding the IMF), while the private sector made gross withdrawals of US$287 million. Secondary income operations represented a net income of US$17 million.
The balance of the first seven months of the year versus the same period in 2023 shows that the improvement in the cumulative services account is the result of the drop in gross expenditures, especially in freight and insurance. On the gross revenue side, the total registered an increase of 1% to US$4,801 million, with the Travel, tickets and other card payments concept standing out with an increase of 43% to US$1,507 million. While Professional and technical business services showed a decrease of 9% to US$3,148 million dollars and Freight and insurance fell 36% to US$147 million.
On the gross expenditure side, the total fell 23% to US$6.612 billion, with the 67% drop in freight and insurance (US$576 million) being decisive. and Professional and technical business services by 23% (AU$1,755 million), while Travel, tickets and other card payments fell by just 6% toAU$4,281 million.
However, year-on-year comparisons should be taken with a grain of salt, as the aforementioned scheme has been in force since December 2023, under which exporters can settle up to 20% of their export collections through the stock market. However, The result continues to show a constant source of drainage of the BCRA’s reserves.
Source: Ambito
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