A new look at the deterioration of the external accounts

The external accounts surplus and the resulting accumulation of international reserves have been key pillars of macroeconomic stability in Argentina in recent years.

Last year, for the first time in the Kirchner’s era, international reserves fell by around US$ 6 billion, and this reduction took place in spite of roughly US$ 3 billion of external loans to the Central Bank.

The government response to the fall in international reserves was the imposition of draconian foreign exchange and import controls that are even limiting imports of intermediates products and spare parts that are essential for production, of key products such as medicines and have restricted dividend payments to negligible amounts.