Hernan Nessi
2 min read
By Hernan Nessi
BUENOS AIRES (Reuters) -The last eleven months have seen a net outflow of $12.3 billion from Argentina, affecting the central bank's ability to accumulate reserves, according to the bank's latest report.
As President Javier Milei has attempted to maintain the value of the peso to combat high inflation, relatively high prices for domestic goods and services have encouraged imports and discouraged tourists.
The report said that in April, 636 million more dollars left Argentina than entered, the latest in almost a year of outflows.
This does not include funds from Argentina's recent deal with the International Monetary Fund. Argentina currently has 38.7 billion in dollar reserves and the $12 billion Argentina has received from the IMF so far has allowed it to lift capital controls that had long blocked foreign investment.
"Payments for imports, the negative balance in services and interest, and the structural tourism deficit explain the deterioration of this account this year," it said.
"The services sector registered a deficit of $1.161 billion in April ... This deficit was explained by net outflows under 'Travel, tickets, and other card payments,' 'Other services,' and 'Freight and insurance' …, partially offset by net inflows under 'Professional and technical business services,'" the central bank reported.
Analysts predicted that the current trend is unlikely to reverse in the short term.
"It is happening in an election campaign, with macroeconomic factors supporting the outflow of funds - purchase of goods and services, travel - and in a few months agricultural exports will decrease because of seasonal factors," with major harvests ending, said Pablo Besmedrisnik, economist and director of VDC Consulting.
The same central bank report describes how the large fluctuations in the goods sector and continued deficits in the services and primary income, which includes interest payments and dividends, pose a challenge for the government's access to foreign currency.
(Reporting by Hernan Nessi; Writing by Leila Miller; Editing by Philippa Fletcher)
