Guido Sandleris, Governor of the BCRA, held a press conference.
Find below his speech:
Good morning.
First of all, I would like to congratulate president-elect Alberto Fernández and all Argentinians on their involvement in yesterday’s democratic event.
The result of the election brings about a transition between two administrations belonging to different parties in a context of high economic uncertainty.
As I have said on other occasions, a presidential election is not expected to generate the level of uncertainty and volatility we have witnessed these months. This does not happen in other parts of the world.
Most countries in the region have managed to reach some common consensus on economic rules, which prevents elections from affecting their economies. Unfortunately, we Argentinians have not been able to build a consensus for protecting ourselves against the uncertainty that a change of government may trigger.
Setting aside the result of the election, this is the Central Bank of Argentinians. For this reason, we are concerned about both what happens up to December 10 and what will happen after that date. We will do our best to make sure that the Central Bank has the necessary tools to continue conducting a consistent monetary policy.
The Board of the BCRA met yesterday after the election and, upon discussing different scenarios, decided to take additional measures with a view to protecting international reserves and giving the new government more leeway to implement their economic policy.
There was a significant increase in the demand for dollars, mostly from individuals, at the end of last week. In view of the risk that such behavior might persist this week, we tightened foreign exchange controls.
As was announced last night, we reduced to 200 dollars the maximum amount that individuals may buy for saving purposes over a month, without the BCRA’s authorization.
I know that such a measure is, though temporary, very strict and affects many people. It seeks—let me insist on this—to safeguard reserves during this transition period, until the new government sets out their economic policy guidelines and uncertainty is eliminated.
The rest of the foreign exchange scheme remains virtually unchanged. We aim to protect the real economy from financial fluctuations as much as possible. For this reason, the measures announced exclusively focus on the purchase of dollars for saving or financial speculation, and do not affect access to the forex market for foreign trade or for repayment.
As I have said, Argentina could hardly arrive at a common consensus. An exception to this is, as I have said on other occasions, the prudential regulation of the financial system. More than 15 years ago, the BCRA laid down regulations to significantly limit banks’ exposure to the public sector and divided the banking system into two segments, dollars and pesos, which proved to be virtually isolated in practice. As a precautionary measure, banks were also required to maintain high liquidity levels, much higher than international standards. All the administrations have upheld these principles ever since.
This is an example of a common consensus that we have managed to build in the interest of savers. Such a consensus has made it possible for our financial system to remain sound despite recent strong volatility.
On a final note, as it happens worldwide, the coordination of monetary policy with other economic policies is of paramount importance. In this context, I will work in this transitional period to coordinate these policies with the new economic team.
In the past years, progress has been made to correct some of the imbalances of our economy. Both the primary fiscal imbalance and the external imbalance have practically been eliminated, and the lag in utility rates has been corrected to a great extent.
However, we are facing challenges that call for immediate action. Inflation has gone up after the recent period of foreign exchange instability, and economic activity must regain momentum to reduce poverty. Therefore, it is a must to put an end to the current economic uncertainty.
I have recently said that no economic scheme can succeed without a minimal degree of political consensus. We, as a society, have the opportunity to build that consensus. If we do so, I am sure that Argentinians will finally manage to reduce inflation and, especially, follow the path of steady growth that has been elusive for so long.
Thank you.
