In Search of a New Instrument to Sterilize Pesos

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In Search of a New Instrument to Sterilize Pesos

Second week
November 2019

From now until the end of this year, the National Government needs around ARS 330 billion in order to cover for the primary deficit ─which is seasonally high in December due to the payment of the 13th wage and other expenses─ and the interest and capital payments of the bonds in pesos that were re-profiled at the end of August and that have maturity dates in the remainder of the year. Facing this scenario and without any access to financing sources or resources in pesos that can amount to such a figure, a decree of the Executive was released allowing the CB to make temporary advances to the Treasury of up to ARS 400 billion. This decree broke a principle installed during the last few years that was reinforced in the now abandoned program with the IMF: to not finance the Treasury by printing money. Necessity knows no law.