Argentine government restores “soybean dollar” to raise foreign exchange and raises criticism from ruralists

Argentina reinstated this Monday (28) the so-called “soybean dollar” to allow agro-industrial entrepreneurs to settle their exports at an exchange rate of 230 pesos per dollar, according to the rule published in the Official Gazette, with which the government expects to raise a minimum of US$ 3 billion.

The “soybean dollar”, valid until 30 of December, is more attractive for exporters than the official wholesaler, today at 165,28 pesos per dollar, but implies a an advance of foreign exchange in the agricultural sector and an increase in the non-monetary liabilities of the Central Bank.

This exchange rate incentive regime is part of the Export Increase Program that allowed in its first edition, last September , settle more than US$ 8 billion and export almost 14 million tons of soybeans in less than a month, as recalled by the Minister of Economy, Sergio Massa, last Friday Monday at the time of the announcement.

The measure also allows went to Argentina to meet the quarterly goals established with the International Monetary Fund (IMF).

Argentina needs to collect soy export rights and raise foreign exchange to meet the goals established with the IMF.

Massa claimed last Friday that Argentina “will close the year meeting the target of 2.5%” of primary deficit and “will close the year meeting the reserve accumulation target”, which are the commitments

The rule published this Monday authorizes the Ministry of Economy to issue bills in dollars with a ten-year term to cover the equity difference that this decree generates for the Central Bank.

The “soybean dollar” generates a monetary issuance to buy the currencies that, according to a report by the manager SBS, can be between 18% and 20% of the monetary base in November, which will mean extra sterilization efforts on the part of the Central Bank, in an inflationary context of 28% per year and a high the monetary institution’s indebtedness level.

Massa reached this agreement with the agro-industrial chambers, before which he recognized that they are “one of the protagonists of the reserve accumulation process” and that they promised to liquidate a minimum of US$ 3 billion.

However, rural groups were dissatisfied with the measure: “The ‘soy dollar’ shows a need for money. It is not a measure for the countryside, it is a form of collection”, said the president of the Argentine Rural Society, Nicolás Pino, to Continental radio station.

According to the norm published this Monday- fair, part of what the State receives in export tariffs will be used to finance programs that serve regional economies and local value chains.

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