The other faces of the flight of dollars


In a country situation in which the external crisis (lack of foreign currency in the Central Bank) is notorious, that the government tries to control the outflow of dollars should not be cause for scandal. The opposite could be said: the demand for greater controls would be more reasonable, demanding that the government “take care” of existing foreign exchange and that which is coming in as a result of exports.

And yet, the application of the Financial Economic Capacity (CEF) control prior to the authorization of imports aroused an angry reaction, above all, in the leadership organizations of local economic power. Daniel Funes de Rioja, head of the UIA, and Mario Grinman, president of the Argentine Chamber of Commerce, were at the forefront of the arguments against the “mechanism to which companies are subjected to establish whether they will be able to formalize imports and payments abroad”, according to his words.

They argue that these controls have narrowed the possibilities of importing, and that this threatens the supply of inputs, “which is beginning to cause problems in the productive start of the year.”

From the government they point out that the mechanism was not modified, but that the increase in import operations made its application more intensivewhich consists of verifying that whoever is going to request an import license has sufficient economic-financial capacity, that is, economic solidity, to face the requested operation.

In other words: put a stop to simulated import operations to obtain foreign currency from the Central Bank at the official wholesale price (106.15 pesos at the value of this Friday) and then divert them to the financial markets obtaining double in pesos, or escape them after buying them cheap.

Import demand multiplied by ten

But, more recently, it began to be observed that the excess demand for dollars for imports did not come only from “true” firms, but from some habitual importers who multiplied by two, three or even ten their “normal” demand for imported goods. (mainly inputs) from abroad.

“Some companies, instead of dollarizing portfolios, are dollarizing assets, that is, they overstock of imported inputs to prevent an eventual devaluation blow,” explained an analyst very close to the monetary authority. “There is no intention of the government to devalue, nobody believes that this is a solution to anything, on the contrary. It has already been rejected even at the negotiating table with the IMF. And yet, in the current state of exchange rate weakness, if many companies are allowed to continue this practice of advancing purchases abroad, there is a risk of a self-fulfilling prophecy: they are the ones causing the devaluation pressure with their own demand for foreign currency. “, he explained, to conclude that “it would be desirable that some brake be applied to these practices”.

Whether the stricter application of the CEF to import orders was a brake or not, can be verified with the foreign trade figures. Also, conclusions can be drawn, based on these figures, on what degree of reason assists the business leadership that reacted against the controls.

The CEF originated as a supervisory mechanism to limit the margin of speculation through imports. The Ministry of Productive Development (Matías Kulfas), the Central Bank (Miguel Pesce) and AFIP participated in the development of the tool, with the latter corresponding to its application (Mercedes Marcó del Pont).

Once the AFIP gives the conformity to the CEF, the company is enabled to request the import license in Productive Development. And the importer can acquire the foreign currency in the official market.

A strange “blockade” on imports: they are 60% higher than a year ago

Official statistics indicate that imports actually made in the month of last December amounted to 6,216 million dollars, which represents 59% more than those of December of the previous year (2020), when they reached 3,908 million. The total of this growth can hardly be attributed to the increase in prices in dollars. Already in previous months, the unusual growth of purchases abroad had been verified, which is also not justified by an increase in production that would explain a jump of these dimensions in the demand for imported inputs.

In January of this year, when the dome cameras denounced that the CEF control was “blocking imports”, goods entered for US $ 5,272 million, with an increase of 37% over the same month of 2021. Textile and tanning industry imported 94% more than last year, Commerce 55% more, machinery and equipment 42% more, and oil companies and the chemical industry 41% more. The alleged blockade of imports is not reflected in these foreign trade figures.

Moreover, preliminary data for February (first five business days of the month) show that imports of goods continue to increase: 13% more than the daily average for January, but 54% more than those of the first days of February last year.

Companies affected by a negative evaluation of the CEF are authorized to submit the non-conformity procedure and prove the reasonableness of their import request. How many non-conformity procedures were initiated? Only 24 (one even voluntarily withdrew from the request), out of thousands of import operations carried out.

It is not an exaggeration to say that the demands of the business leadership have more to do with the political interest of avoiding any type of official regulation, which they do not admit even in the face of an external sector crisis such as the current one. Even when the exchange control measures have not been extreme. And when, in addition, the damage to the productive activity that they denounce is not verified.

On the other hand, there are serious suspicions that, just as the private financial debt payment account abroad is an open faucet through which resources would continue to flow, the increase in imports of goods would be contaminated with similar purposes. More than questioning the controls, it would be necessary to ensure their effectiveness.

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