Argentina secures half a billion dollars in Saudi investments in food and energy
In the past, Argentine President Alberto Fernandez tried to shore up cash reserves by getting dollar revenues from exports to flow into central bank accounts and accepting cash payments from the International Monetary Fund. But those measures are winding down dramatically, and Fernandez – who has already withdrawn his re-election candidacy – can’t guarantee that talks to reformulate a $44 billion bailout program with the International Monetary Fund will result in accelerated disbursement of loan tranches to help ease the situation.
A spokesman for Argentina’s central bank noted that market estimates of net money reserves do not correctly reflect its balance sheet because it fails to account for other sources of financing, such as the currency swap line with China.
crisis management measures
Officials resorted to other emergency measures in the meantime, including taking advantage of a swap line with China to finance $1.8 billion in imports. It is also cooperating with Brazil to expand bilateral trade with lines of credit in Brazilian reals, which enables it to avoid using the dollar.-
Will the attempts of Brazil and Argentina to abandon the dollar in trade exchange succeed?-
For the Argentines; The uncertainty is evident, and as a result of the central bank’s decision to cut off access to dollar savings during the economic crisis of 2001, many Argentines are already withdrawing money from savings accounts. They withdrew more than $1 billion in dollar deposits from the banking system between late March and the end of April.
There is also little evidence that foreign exchange reserves can be rebuilt soon. The worst drought of this century has ruled out any possibility of an influx of money from agricultural exports before the scheduled elections.
Juan Sola, an economist at Bank Trust & Co. in Buenos Aires, believes that the danger lies in the lack of sufficient cash reserves to cover the country’s needs. The central bank may not have the dollars needed to meet any stronger demand for foreign exchange deposits.