Jorge Vasconcelos: “The trade deficit with China is increasing”

Jorge Vasconcelos believes that the agreements reached with China “does not qualitatively change the situation of external weakness of the country, it only stretches time“. In turn, he spoke of the uncertainty surrounding the markets: “It is clear that the market sees more risk from the public sector than from the economy in general”, safe in Fontevecchia modeby net tv and RadioProfile (FM 101.9).

How real is it that Massa returned from China with $5 billion to use for imports from China, which would result in increasing reserves?

The statement from the Central Bank does not clarify this point well. In practice there is a necessary expansion of the swap because andThe trade deficit with China is widening.

In the last 12 months we exported by 8,000 million dollars but we import for 16,000 million. And if we don’t have dollars to pay that deficit, what we do is expand credit.

Given this situation with the trade deficit, the mechanism is to postpone the payments that would correspond to said deficit, that is, it is trade credit. We are increasing our borrowing to finance imports that we cannot otherwise.

The Central Bank made the most important dollar purchase of the year

In fact, the accumulated foreign trade credit that we have been taking as a country, not the State but the companies, exceeds 12,000 million dollars in the last year.

The first explanation is trade deficit, import financing. It has to do with keeping under contract the relations between private companies, Argentine importers and Chinese exporters.

Regarding the extension of the swap for 5,000 million dollars, there the possibility of convert yuan into dollars so that reserves can be reinforced.

It happens that reserve levels are so low in net terms that, taking into account the country’s commitments to pay debts this year, we would be very fair with that amount.

The Government covers a lot but does not squeeze much. It has too many objectives and means that this type of news does not generate a change in expectations, but instead makes one think that we must continue paddling to avoid a worse situation. It puts a floor to the deterioration of expectations.

So you think they did give you another $5 billion, building a bridge to make it to the end of the year, regardless of whether it ends up being positive or counterproductive in the long run?

Yes, as is. It happens that the central does not clarify that point. But Not registered officials say that is feasible.

Will those 5,000 million dollars serve, strongly, so that they are freely available to enter the exchange market or, finally, to pay for imports and that with these savings the reserves are fattened? What changes is the timing of when everything is paid together or that, in any case, it is throughout the payment of imports?

The possibility of exchanging yuan for dollars and keeping them in the gross reserves of the Central Bank has already happened before, it would not be strange if it happened again.

The alchemy of the plan to arrive

But for these contracts to be operational, Argentina must continue with its feet on the plate in its relationship with the IMF. oh sea, this credit does not replace the agreement to maintain with the Fund, but it gives more bargaining power to the staff of the same. are played where the final net result does not qualitatively change the situation of external weakness of the country, they only stretch the time.

Which would be no small thing for the Government, with the fragility of the reserves it has, right?

The theme of fragility is seen every day. For example, in this decision that the provinces will have to go to finance part of their debt maturities in the market, because the BCRA is not going to supply them with dollars.

All this keeps the entire market on alert, following the situation day by day. It is clear that the market sees more risk on the side of the public sector than on the economy in generalI

If one looks at the floor of the value of the assets of Argentina, in July of last year, from that moment the price of the shares in dollars rose close to 110%. However, country risk, which reflects the value of Argentina’s foreign debt bonds, remains extremely high.

Massa’s mini-Marshall

In other words, today there are many more certifications about the future of companies and the private sector, and uncertainty continues regarding the commitments of the public sector. Note that, for example, there is no pessimism about whether YPF will be able to continue growing in its oil and gas production.

Could it be summed up in that this trust is economic but distrust is financial?

That’s right, and it’s seen with what they pay Argentine companies to borrow abroad, close to 6% per year. It is paradoxical, because there is a contrast between the trajectory expected from the private sector against the difficulties that it is not yet known how it will be resolved. This year’s electoral transition is one of the main ingredients of this uncertainty factor.

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