With no reserves, the government is building a new wall to stop the outflow of foreign currency

With no dollars in the Central Bank (BCRA) and forced to take on new debt to cover its obligations with the International Monetary Fund (IMF), the government is once again using its bureaucratic wall to block imports. Before the decision, they warn the companies, Economic activity will be affected and prices will be affected as businesses pass on the higher replacement costs.

This is a I’ve already seen it of the situation experienced in February last year. This morning again, as he was able to confirm THE NATION through three business sources, AFIP’s Financial Economic Capacity (CEF) system was once again heavily impacted, the first hurdle that must be overcome by any company that needs to carry out a foreign trade business, such as an import, in Argentina.

This medium consulted the Agency led by Carlos Castagneto and the Minister of Trade, led by Matías Tombolini, but received no response. Two sources from the financial group connected to the import world told this medium companies that have foreign currency exports pending settlement will not be able to access the single foreign exchange market for this amount. However, companies complain that CEF’s plateau affects companies without pending settlements.

There is currently $3.1 billion in liquidation pending, according to information maintained by the government. This decision allows them to influence the CEF, according to its Article 5, which they cited to justify today’s import blackout. They added that the same decision applies to VAT refunds to exporters. They will not have access to this “benefit” if they do not liquidate their outstanding coins, the Government added.

The CEF is a kind of individual risk management profile that is updated monthly with a quota (a certain amount) based on an AFIP formula. This formula is not transparent and often serves to hinder companies. This bar is decisive when accessing a SIRA (import permit) distributed by the Secretary of Commerce. Next, you need to access BCRA dollars.

In February last year, the AFIP then led by Mercedes Marcó del Pont and the Ministry of Productive Development, then headed by Matías Kulfas, had admitted to “combing” importers deemed “dubious” by the authorities. On January 26, there was then a CEF blackout, which was reported to the media on February 8. The system was then tweaked and then began reflecting companies’ solvency and liquidity every 30 days to show their “consistency over time,” officials said. When SIMI was replaced by SIRA, already under the management of Sergio Massa in the Ministry of Economy and Castagneto in AFIP, he also promised a change in CEF that never came. At least until today when changes started to be recorded.

“Remember last February? The same thing came back.” said head of a major business chamber. “Today, companies woke up to the CEF falling significantly, lower, without any apparent change in their fiscal, economic and financial behavior,” he added. “They dropped about 60% of the quota”, confirmed the president of another major business entity in Argentina. “I have some [empresarios] specifically that they had nothing pending for export. By the way, you can see that some CEFs that had nothing to do with this went down, but it makes sense because there are no dollars left.’ complete.

“Some time ago I received information about this from members of the Comex committee,” added a third trader when asked by THE NATION. “There have been cases of companies with CEF $1, as happened at the beginning of last year, which makes access to the foreign exchange market conditional. Basically, they are telling the company that it could only import for this ridiculously low amount,” he said.

However, it is not yet a widespread problem, as this outlet was able to learn. At least, Large industrial companies are not affected, for now. The official measure, so far, will affect the media first. Curiously, “focused on production and technology, Massa began his tour in Mendoza and San Luis,” his reps said this afternoon. The minister visited the IMPSA company, they explained, and described it as “a symbol of Argentina’s industrial development.”

Faced with a rejected CEF, the option was to request a “reform”, a request that can be made once a month. This case usually results in rejection. A non-compliance request can then be submitted. In this case, AFIP requests professional reports, bank statements, AFIP vouchers, from other organizations, records and certifications of companies, associations and similar entities issued by IGJ, RPC, Inaes and other organizations, statutes or social contracts, minutes, certifications services , accounting books, among other documents. Now, this official request to liquidate coins before being able to access MULC is added. The lock, as it appears, began to appear today, will be seen directly on CEF.

The situation of the reserves in Argentina is dramatic. The government had to make a payment to the Fund yesterday with new CAF debt (US$1 billion) and with yuan borrowed from the exchange with Chinese. Today it had to pay $736 million more to the agency. Official sources confirmed THE NATION, however, what Tomorrow there will be an order to pay on Friday with Special Drawing Rights (SDR) that would come from a fund that the IMF has for balances with countries that do not use them.

Two weeks ago, moreover, the government announced an increase in the cost of imports through the generalization of the PAIS (fiscal depreciation) tax. Rates of 7.5% were imposed on goods and 25% on services, with few exceptions (among them, a basic basket of food and energy). The government had already extended the payment terms for MULC access with SIRA and was pushing companies to refinance overseas (and provincial) debt. So much so that companies have added a strong responsibility with suppliers and parent companies.

BCRA’s gross or total reserves, which are more than 90% made up of loans of all kinds, sank by US$1,614 million yesterday when the government made the announced payment of one of the tranches of capital loaned by the IMF to Argentina in 2018. They closed to US$24,032 million. To find a lower level, you have to go back to May 22, 2006, when they closed at US$24.015 million. That is, you have to go back 17 years and a little over two months ago.