November 14, 2011
By Ignacio Olivera Doll
Even after these last days of the run on the dollar and after the heavy withdrawals of deposits in foreign currency, Argentina might have counted on more than US$60 billion at its Central Bank if it had not opted to use reserves to pay the government's debt.
The decision to create, last January, a debt reduction fund and another for payments to international financial organizations with the entity's savings managed to eat up some US$15 billion of those savings up to now. It's ten times larger than what went out in deposits from the system in the first two weeks of the AFIP's new measures being in force.
According to data from Econviews, debt payment last year was US$6.5 billion. And this year it rose to US$8.5 billion. Added to this will be, in December, another US$2.2 billion that will be paid out for the GDP coupon bond. The Central Bank ended up last Friday with a total reserves of US$45.6 billion. But it would have US$60.6 billion today if it had not used its savings to pay off obligations assumed by the government.
"The reservation is in that if the government hadn't used these reserves it would still have to pay debt," said Federico Bragagnolo, of Econviews. "If it had done it with fiscal surplus and buying dollars on the exchange market (as it did when there was a surplus), it would not have accumulated that amount of reserves; but if in turn they'd done roll-overs with new emissions, they would have clearly increased," he added.
The economists warn that, strictly speaking, the genuine reserves of the Central Bank are very below those that are officially reported. In the first place, for the loans that the entity takes from European banks and international organizations (today at US$4.4 billion). In the second place, for the accounting of dollar deposits (US$6.4 billion). A pure approach with this criteria would conclude that the reserves are at US$34.8 billion.
Marina dal Poggetto, from the firm of Bein & Asociados, is less critical: "In a context of a lack of credit, using reserves is absolutely level-headed. We were in a situation where interest that the Central Bank owed was much lower than the interest rate that the government would be funding itself with. From the point of view of financing, it was a benefit," she told this newspaper. But she finds the strategy inconvenient "if a recovery of the fiscal surplus is not achieved and, at the same time, monetary policy increases consumption that the current account reserves aspires to."