Saturday, December 4

Assistance to the Treasury soared, but the BCRA contracted working capital

The monetary base (BM), which includes money in circulation and the reserves of commercial banks in the BCRA, grew 2.3% in October ($ 68,952 million) compared to the end of September. This implied a new slowdown compared to the nominal rise in September (2.6%) and a contraction in real terms since the inflation estimated by the consulting firms for last month returned to above 3%. Working capital increased even less: 1.8% per month. Compared to October 2020, far from a strong expansion, the BM fell by around 14% in real terms.

This occurred despite the fact that last month the issue to finance the fiscal deficit hit a new jump. Between temporary advances (AT) and profits, the BCRA transferred to Martín Guzmán $ 352,712 million (yesterday it was known that on the last business day he transferred AT for $ 95,000 million). It’s the highest monthly sum since May last year, when cash aid reached $ 430 billion at the time of the strictest quarantine. After a first semester marked by fiscal discipline, shipments to the Treasury began to grow: in the year they accumulate $ 1.31 trillion and represent 75% of the treasury’s financial sources, far from the official goal of funding at 60% with issuance and 40% with debt in pesos.

“This acceleration had to do with a decreasing percentage of refinancing in debt tenders, simultaneously with a deepening of the primary deficit in the second half of the year, both for seasonal reasons and for public policy decisions (electoral push)” , said a report from the consulting firm Equilibra.

Weights vacuum

Nevertheless, the bulk of the money injected in this way was withdrawn from the street through the placement of Pases y Leliq, the monetary regulation instruments that the BCRA places on banks to limit the expansion of liquidity. Between them, it absorbed $ 245.8 billion during October. As a result, the stock of remunerated liabilities jumped 6% (almost 3% real) in the month to reach $ 4.44 trillion.

Of course This absorption policy has an associated cost. The BCRA pays banks an annual nominal rate of 38% for Leliq, 36.5% for 7-day Passes and 32% for overnight Passes. This led him to pay interest for $ 118,032 million in October and for $ 1.06 billion so far this year. This is the second expansionary factor in the monetary base behind assistance to the Treasury.

Through seasonality, both analysts and officials agree that this dynamic will continue in the last two months. In other words, the need for assistance from the Treasury is expected to remain firm while the Central Bank will sustain its sterilization strategy to moderate monetary expansion, reduce extra pressure on the dollar in this way and, through it, also on inflation. .

In this regard, a LCG report highlighted a contradictory dynamic: while the market is alerting about an alleged emission shock, “all monetary aggregates grow at least 10 points below inflation” and that there is a “more contractionary bias than the expected at the beginning of the year ”. A contrary perception that negatively impacts the demand for money, stated LCG. And he added that in this framework “it is logical” that there is strong exchange rate pressure.

Meanwhile, the recomposition of corporate margins in concentrated sectors of the economy and the international rise in food and energy prices are adding pressure to inflation.