Despite the exchange controls that prevailed throughout 2020, Argentines managed to grow their holdings of dollars last year. In total, they added about USD 8.27 billion to be added to the holdings of companies and families, without being transformed into bank deposits. At the end of the year, local residents had USD 231,937 million stored in safe boxes, outside the country, on the mattress or in banks. Only USD 7 out of every USD 100 is deposited in banks, the rest is “leaked” out of the system.
The data comes from the report “Balance of payments, international investment position and external debt” published yesterday by Indec. The dynamics show that the growth of Argentine currency holdings decelerated sharply last year, although it did not slow down.
Just as families and companies managed to accumulate some USD 8.27 billion last year, in the two previous years of a run against the peso and an open exchange market – in addition to the greater purchasing power of the peso – the figures had been much more important: in 2019 they had managed to amass USD 32,687 million while in 2018 they had added almost USD 24,000 million.
But beyond the rising cost of the dollar, both in its official version and in parallel prices, and the obstacles in the formal market, Argentine holdings in dollars continued to grow.
And just as savers continued to prefer to accumulate foreign currency, so did mistrust in the system. Throughout 2020, the amount of dollars deposited in local banks did not stop falling. The stock of deposits in foreign currency of the private sector fell by USD 3,514 million to close last year at USD 15,934 million.
In other words, only 6.87% of the banknotes are within the system. The rest, USD 216,003 million are in the mattress, in safe deposit boxes or in foreign banks.
The most interesting thing about the International Investment Position data is that the numbers do not refer only to the declared dollars. Through estimates, in addition, the undeclared money is calculated.
The figure of USD 216,003 million owned by residents of the country who are outside the system has an impact on its size. For example, it is almost 5.5 times the international reserves, which for the moment the official report analyzes were at USD 39,387 million. The dollars owned by Argentines that are deposited in banks are part of those reserves, but all the stock that is outside the system – whether it is stored in the country or deposited abroad – is not counted.
Indec data go back to 2006 and show that in the last decade the amount of dollars that Argentines keep rose 106% since 2010. In the same period, deposits in dollars grew only 35%.
The fact that Argentines prefer to save outside the system instead of saving in banks or even in local currency has enormous costs for the country.
“The corralito and the Bonex Plan are not a good precedent for the Argentine to leave the money in a bank and, when there is any noise, the Argentines run to get them out of the bank,” he said. Juan Ignacio Paolicchi of Empiria. “The result is that Argentina is one of the countries in the region with the least credit in relation to the region’s product. Below 15% of GDP, a very low level. Because if you don’t have credit you don’t have investment, if you don’t have investment you can’t develop and if you can’t develop poverty will never go down. So it is essential that the savings, in dollars or pesos, are in the country so that the public sector and the private sector can be financed in the country ”,
“What takes away from you is growth potential. If you have more deposits, you will have more loans. What Argentina loses is financing, banks with greater financial intermediation and more local debt from the Treasury. Because external indebtedness is criticized a lot, but part of that happens because you do not have internal financing. That forces the public sector to borrow from abroad or with the Central Bank, and the private sector directly forces it not to borrow and grow little, “he said. Martin Polo by Cohen.
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