Sunday, June 23, 2024

ECONOMY | 01-10-2022 11:31

'Soy dollar' exports boost Argentina's Central Bank reserves by US$7.6 billion

Sergio Massa's 'soy dollar' exchange rate prompts producers to sell more than US$7.6 billion in grains, boosting Central Bank reserves.

Argentina's Central Bank reserves have been boosted by an estimated US$7.646 billion thanks to the exchange rate stimulus programme for soybean exports, Economy Minister Sergio Massa announced on Friday.

The minister, who introduced the so-called 'soy dollar' as a step to boost the institution's dwindled levels of international currency, said that the incoming funds meant that Argentina's reserves target agreed with the International Monetary Fund (IMF) had not been met. 

The programme, which was in force from September 5 until close of play Friday, offered producers an improved exchange rate if they sold within the period. This allowed an increase in sales of the grain to reach 13.7 million tonnes, Massa said at a press conference.

"In terms of results and accumulation of reserves for the Central Bank this has been extremely important and had an impact that gives us peace of mind," Massa said, specifying that the goals of strengthening reserves agreed with the International Monetary Fund are now "more than fulfilled."

The totals were preliminary, he added, with the final numbers available on Tuesday.

"As of today [Friday)]the income declared, paid and incorporated into the operations of the Central Bank is 7,646 million dollars and there is a balance that continues to enter in the coming days until Tuesday," said the minister.

The figures constitute "a record in settlements and exports in Argentine history," he declared.

The country's gross international reserves in foreign currency are 37.621 billion dollars, according to the Central Bank report, but analysts believe the net reserves are significantly lower.

Argentina has a $44 billion credit agreement with the IMF under which it has pledged to increase its international reserves and reduce its fiscal deficit from 3 per cent of gross domestic product in 2021 to 2.5 per cent this year, 1.9 per cent in 2023 and 0.9 per cent in 2024.

The South American country is one of the world's largest exporters of soybean oil and meal, a business that brings in more than 10 billion dollars in annual tax revenues for the state on total sales of 40 billion dollars.

The minister also announced that new import control measures will be implemented next week. "Now every dollar that enters the country we have to take care of," he said.

At the same time, Massa announced the launch of a new financing programme for small producers improving the purchase of seeds and fertilisers and a fund to encourage regional economies for small-scale production.

The export incentive programme for the soybean sector consisted of granting a special exchange rate of 200 pesos to the US dollar, when the official exchange rate is around 150 pesos and the greenback exchanges for close to 300 pesos in the informal market.



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