A Few Dollars for Many Uses: How Much More Could Imports Be Restricted in 2023?

In addition to its impact on the market, which is still uncertain, the Minister of Economy announced a $1,000 million repurchase plan, Sergio MassaPut once again on the table how short the dollar blanket is in the economy.

The expected dollar amount of debt repayment, which according to various private estimates equates to between 10% and 15% of net reserves, a new destination for available scarce currencies that rival many other priority uses: in principle, the accumulation target required by the agreement with the IMF – In fact, the most sensitive variable -; second, with debts paid (this year, the Agency will issue $1,900 million less than it will pay, plus debts with private parties) and finally, with imports paid, a clause where the balance is. The accumulated debt, estimated at about $8,000 million, is also putting pressure on BBK’s dollars.

In this context, and despite the fiery official statements that “dollars are for production,” the most obvious adjustment variable will remain the availability of foreign currency to pay for purchases abroad.

And already last December, with a total value of $5,000 million, the level of imports suffered from the impact of the strict control regime imposed in October with a decrease of 19.3% compared to the previous year. It was at the minimum amount for the whole of last year, which raises the question of how much more can be restricted, at the expense of a cooling of activity that even the government itself admits is inevitable. A priori, the margin seems small. But so are the options of the economic team.

In December, with $5,000 million, the level of imports suffered the impact of the strict control regime imposed in October with a decrease of 19.3% over the previous year.

Our base scenario assumes a moderate decline in imported quantities, by 1.4%, due in part to a reversal of average imports for the last quarter compared to the previous three, due to lower activity, and also through the implementation of the new system of customs control (SIRA), which leaves a negative headwind. For 2023, Analytica, the consulting firm I founded, has predicted Ricardo Delgadowhich maintains one of the market’s highest forecasts in terms of activity, although it falls short of official guidance: it expects 1.6% growth for the economy this year.

In this context, it is clear that imports will be, this year also, the wedding duck. For the year that just started, we’re seeing growth in the amount of goods ordered and a decrease in those imported. The difference will be partly leveled by import substitution, but also by negative changes in stocks,” said the adviser, who calculates that there are “surpluses” of imports made over the past two years above the real needs of economic activity that can now be delivered to production or marketing.

In any case, the special study considered that “the accumulation of reserves required by the agreement with the International Monetary Fund depends on trade controls, but also on the low purchasing power in dollars, taking into account the slight real depreciation in the value of the peso, and the decrease in growth in economic activity.

The details of the import adjustment in December provide concrete evidence: it was the purchases of inputs and intermediate goods, the line that, along with parts and accessories, as well as capital goods, was the one that “drives” the economy, it was that which fell by the largest proportion recorded on an annual basis, with A decline of 19.3%, exceeded only by energy purchases (36%), which had a much lower incidence in mid-summer.

He said, “The limited supply of dollars, with higher demand than last year, will affect economic activity through imports.” Sebastian Menescaldifrom consulting firm EcoGo, as they predict a decline of at least 2% in the economy this year.

The limited supply of dollars, with demand higher than last year, will affect economic activity via imports (Menescaldi)

In any case, the decrease in the need for dollars to buy energy abroad is considered by analysts as good news that will contribute to amending the record recorded last winter. Estimated savings reach $3,000 million, according to the most optimistic official and private accounts. However, this number is a sample button compared to the foreign exchange figure that will result from this year’s drought to the government. And the likelihood of dollars being allocated to production is getting worse, far from better.

The panorama is completed by adding the weight of importing services, especially tourism, which has a significant impact on the element. And there does not seem to be much room for adjustment given that after the introduction of the “Qatari dollar” the account is at the lower levels, except for 2020, the year in which the epidemic prevented Argentines from traveling and forcibly calmed the influx of foreigners. Currency.

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