Tuesday, February 20, 2024

ECONOMY | 28-07-2021 17:00

Argentina's government speeds up money printing ahead of election

Central Bank was printing money for the Treasury at the fastest pace so far this year in July.

Argentina’s Central Bank is printing money for the Treasury in July at the fastest pace so far this year, potentially fueling even faster inflation as it helps to finance government spending ahead of midterm elections in November.

The monetary authority led by Miguel Pesce sent 180 billion pesos (US$1.86 billion) to the government in the month through July 22, double the amount for all of June and the most since last December. It has shipped funds to the Treasury for a third time this month, according to the most recent data published on Wednesday.

In total, the Central Bank has sent the Treasury 510 billion pesos (US$5.3 billion) so far this year, just under half the amount estimated in the government’s 2021 budget. Without access to foreign credit following a sovereign default last year, President Alberto Fernández has relied on money printing to finance social spending and other stimulus programs during the pandemic.

The strategy has added pressure on the currency market and fueled inflation. A widening gap between Argentina’s official and parallel exchange rates has raised concerns about a possible devaluation of the official peso, even as Economy Minister Martín Guzmán has said it won’t happen after the elections.

Inflation remains among the top concerns for Argentines, who see prices rising 49 percent over the next 12 months, according to a survey.

by Patrick Gillespie, Bloomberg


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