Argentina runs out of reserves for the dollarization planned by Milei

The dollarization of the Argentine economy is going to have to wait. One of the great promises of the already elected president Javier Milei (Libertad Avanza) will not be possible in the short term since the country continues to lose dollars as sand from its reserve of the Central Bank of the Argentine Republic (BCRA). Specifically, according to official data to which elEconomista.es has had access, the BCRA went from hoarding 25,225 million dollars on October 12 to 21,102 on November 15, four days before the second round that gave victory to the libertarian candidate. Several Argentine experts consulted by elEconomista.es They maintain the same thesis: “dollarization is not viable in the short term because there are no dollars.”

It is true that the Argentine economy is deeply dollarized. Large operations such as the purchase and sale of businesses or homes, the acquisition of large goods such as the purchase of vehicles (both second-hand and new), as well as travel or other services operate their transactions in this currency, but those dollars They are not on the official market and, therefore, Milei cannot dispose of them. According to the latest figures from the National Institute of Statistics and Censuses of the Argentine Republic (INDEC), Argentine savers had 264,498 million dollars in their possession. From this figure we must deduct some 15,424 million dollars that are deposited in the financial sector. Therefore, the Argentines would have 249,524 million dollars ‘under the mattress’ this summer.

This is still insufficient for an economy of 48 million people and would lead Argentina back to the corralito.

This dollar drought is caused, in part, by the climate drought. The River Plate country receives part of its foreign currency through through grain trade and the lack of rain this year has caused them to go from earning 57,000 million dollars last year to having a tax collection from the sale of cereals of 24,000 million. Next year, a collection of 36,647 million is expected, much lower than expected.

The idea of ​​dollarizing the economy was diluted throughout the second round campaign. In the presidential elections of October 22, the Peronist and former Minister of Economy, Sergio Massa gave the surprise by obtaining 36.68% of the votes, while Milei, obtained 29.98% of the vote. After this, the libertarian candidate received the unconditional support of all the alternatives that proposed a change in Argentina, but the most significant was that of the third candidate of the first round, Patricia Bullrich.

From that and until the runoff that gave him victory on November 19, the speech of “blowing up” the Central Bank and dollarizing the economy of the libertarian candidate was diluted to give way to a more moderate message in which “change for Argentina” was the premise of the campaign. “Banish the ruling party and put an end to caste.”

The CEO of the economics and business consultancy ABECEB, Mariana Camino, explained to elEconomista.es that the process of dollarization of the economy “in the best scenario would occur in his third year in office.” The expert reiterated that, in addition, the libertarian does not have the support of the chambers and to dollarize the economy “it is necessary to reform the Constitution.”

The expert assures that to know what Milei’s plans are going to be from now on He first has to form a government on December 10 and “see who will be the Minister of Economy, which I can assure 90% will be Federico Sturzenegger”, who was, curiously, Governor of the Bank of Argentina during Mauricio Macri’s presidency.

YPF rises 33% in the stock market after the privatization announcement

The market likes economic orthodoxy and Milei’s announcement on the radio this Monday that he was going to privatize the public oil company YPF was noticed in the markets. The company bounced more than 30% in the first moments of yesterday’s stock market session on the occasion of that announcement made by the libertarian to release the State from 51% of the shareholding. Mariana Camino explained that “it was expected” that this would happen, even in the dollar exchange rate.

Milei’s victory generated a positive reaction in the markets, with two consecutive sessions in green for the S&P Merval, Argentina’s main stock index. After closing on Monday with a rise of 7.11%, at the beginning of yesterday’s session the rebound was already 12.41% and at mid-session it was 17.7%.

The libertarian candidate assured that “everything public that can be in the hands of the private sector, will be in the hands of the private sector.” Among the first companies that he announced, in addition to YPF, was public Radio and Television.

Thus, as a result of this announcement, YPF shares on the Buenos Aires Stock Exchange experienced an increase of 10.31% in Monday’s sessionto which is now added an increase of up to 33.44%, climbing to 12,880 Argentine pesos (33.06 euros) per share.

But before YPF returns to the private market, “they have to put it back together first,” said the libertarian. Milei said that the owner of the Economy portfolio at that timeWhen Axel Kicillof nationalized the oil company, he deteriorated the company in terms of results “so that it is worth less than when it was expropriated.” Therefore, Milei’s plan is to “put it back together” and then hang the “for sale” sign on it. Mariana Camino explained that for this company to become profitable again “the future Minister of Energy will carry out a good reform of the energy market.”

In the last three months, especially after the primary elections in August, the Buenos Aires Stock Exchange experienced strong fluctuations.