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Predictions that the Central Bank will finance the Treasury with 25 billion pesos this year
El Cronista
February 11, 2010

Possible extrapolation of 2.4 billion pesos that have already been emitted in January to give assistance. It's estimated that the government needs some $40 billion pesos to close its accounts this year.

EL CRONISTA Buenos Aires

In the private arena they are estimating that the Central Bank will be converted into cash box number one for the government of Cristina Kirchner to close this year's books. Leaving aside the US$6.5 billion that the Treasury needs to shield the hard-currency debt (that Economy intends to pay with the use of reserving through the Bicentennial Fund), a fiscal hole is projected for $40 billion pesos to cover the primary deficit, pay debt maturities in pesos and assist the provinces. A report from M&S Consultores predicts that more than half of this amount could be financed with monetary emissions from the BCRA, through yields and transitory advances to the government.

In December, the official organization, which a few days ago fell under the orbit of Mercedes Marc del Pont, emitted pesos to finance the Treasury for $3.2 billion pesos , and $2.4 billion pesos in February. On this, from the consulting firm of Carlos Melconi n they predict that the fiscal emission, extrapolating the number from January for the whole year, would be more than $25 billion pesos. Some $12 billion pesos could be provided from transitory advances and another $16 billion pesos from BCRA yields. But fiscal financing is only one part of the monetary emission predicted for this year that could surpass $60 billion pesos. They would also emit some 30-35 billion pesos for buying dollars abroad, while the rest would be through the winding paths of bank financing (that end up being the last emission of the BCRA).

The loans that the monetary authority makes to the government are coming in a clear increase. In rigor, on December 31, 2009, the transitory advances from the BCRA transferred to the K administration came to $36.580 billion pesos, registering an increase of almost 40% during this year. Already in the first month of 2010, the credit was placed at more than $38 billion pesos. In this sense, it is speculated also that with the new leadership at Reconquista 266 with the highest affinity for the presidential couple the rate of growth will not decelerate, quite the contrary. The dilemma is that the advances not just become monetary emissions, for they add an alert to the problem of inflation.

Despite this, those loans have a limit, established in the Central Bank charter. Last year what was transferred arrived at almost the maximum of $40 billion pesos allowed by the monetary authority. And this year the sequence promises to repeat. "We believe that conditions will be complied with for financing through yields and transitory advances satisfying the requirements of the BCRA charter, while we don't rule out that its use is reaching the maximum allowed," said M&S Consultores. Anyway, they didn't delay in adding that the results will depend on various factors. "It remains to be known what the balance for the BCRA was in 2009 (from where the yields are coming out that could be transferred this year to the Treasury); and in second place, what will be the monetary base and total revenues in 2010 (to not overshoot the limits on transitory advances that according to the charter can be transferred to the Treasury)", they wrote. For the rest of the money that the government needs to cover the fiscal gap, other options are added. "The complementary candidates that come up for covering fiscal necessities are loans from the banking system and the sale of ANSeS assets," the report stated.

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