The Central Bank showed its best balance in six years, but reserves are worrisome


With assets mainly denominated in foreign currency and liabilities in pesos, the dollar movements – determinants of the economic and financial collapse of 2018 – left a balance of the Central Bank balanced by the effect of the "liquefaction" and the extinction of Lebac.

According to the latest Summary of Assets and Liabilities Center, updated to November 30, the Leliq's stock reaches US $ 711,436.7 million. If you add the remainder of Lebac, for about $ 116,318 million and other problems, the The BCRA's debt securities totaled 832,686.5 million pesos.

This represents 67.2% of all the money with which the economy works, the Monetary Base (circulation in circulation, checks of cancellations and deposits in current accounts), for 1,238,890.7 million pesos. The monetary entity pledged to maintain this level of Monetary Base until June 2019.

By observing the active of the central balance sheet, Leliq and Lebac accounted for 42.8% of the international measures in pesos, to US $ 1,946,453.9 million on November 30 (US $ 51,193 million at an exchange rate of US $ 38.0217).

As a consequence of the abrupt depreciation of the Argentine peso in 2018, more than 50%, and the sale of disarmament carry trade of April 25, which ended in practice with the extinction of the Lebacs, the level of Compensated responsibilities of the BCRA regarding reserves fell from 111% on 23 April to 42.8% on November 30.

It should be remembered that the Lebac stock last April 23 arrived US $ 1,377,767.4 million, in front of international reserves for US $ 1,238,723.8 million (US $ 61,185 million at an exchange rate of US $ 20.25 per US dollar).

Similar debt stock in the balance sheet of the entity, equivalent to more than US $ 60,000 million or 11% of GDP, with a high interest rate, above the assets in foreign currency, caused turbulence in the financial market, with a dollar that doubled its value in five months, until exceed 41 pesos on September 28.

The best balance since 2012

Have to back six years such a low ratio between paid liabilities and reserves. According to the Central Balance Sheet on December 7, 2012, the reservations international measures in pesos reached US $ 220,707.3 million (US $ 45,397 million at an exchange rate of US $ 4,982), while the securities issued by the BCRA (Letters in local and foreign currency) added US $ 96,312.4 million, 43.6% of these reserves.

The monetary authority argues that, with the current monetary policy Guido Sandleris to the presidency of the entity, "are several factors that sustain sustainability liabilities. "

"In recent months, the Central Bank's balance fell both in terms of GDP and in terms of international reserves, with which the starting point gives more room for maneuver to the new monetary policy ", affirms the Central.

Between April and September, Argentine Central Bank liabilities, including letters, notes and passes, fell from 11.2% of GDP to 5.6% of GDP, while the ratio of international reserves rose from 110% to 40%. cent

"This dynamic was first explained by the fall in demand for Lebac by the non-banking private sector since the start of the financial turmoil in April and later by the Bank's disarmament program implemented by the Bank. August In the case of the relationship with international reserves, the increase registered by the exchange rate in that period also influenced, "summarized the monetary entity.

The weakness of reserves

The Central Bank scenario also many difficulties. With one interest rate just below 60% In pesos, the increase in liabilities advances faster than the value of the dollar, with the consequent progressive deterioration of the balance sheet.

On the other hand, the Argentine economy needs to recover the current account surplus -Commercial and tourism and services- so that the net profit of dollars consolidate reservations BCRA and relinquishes its dependence on foreign credit as a source of foreign currency.

Currently, the international assets held by US $ 50,000 million, but this composition includes IMF Disbursements, which are only available to pay off debts, the to trade with China, a loan from the Basel Bank, the remainder of REPO with banks and Deposits foreign currency.

Therefore, the net international reserves available hit $ 14.771 million November 23, according to calculations by Balanz Capital. It is an amount that barely covers five months of imports.

Balanz said that "in October and November the BCRA did not participate in the foreign exchange market. changes in reserves are due to two factors: IMF transfers and debt payments ".

"O net reserves (discount bonds with the private sector, multilateral organizations and REPO, loans from banks backed by government bonds) were maintained stable at around USD 14.7 billion in November"he said.


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