Memoria Anual

From 1935 to 1989, the BCRA presented a summary of what had been done in its Annual Report.

Executive summary

The authorities of! Constitutional Government assumed its functions in a context that strongly conditioned the development of the economy in the short and medium term, characterized by a worsening of! inflationary process, fiscal imbalances and of! financial sector, and an unprecedented volume of indebtedness with the rest of the world! world. Within this global framework, large sectors of the population had experienced a significant deterioration in their standard of living.
The magnitude of the external debt was the result of the economic policy implemented since the mid-1990s. 70, which was oriented to the reversal of! development model of previous periods, fundamentally in the role assigned to the external sector, which was based on a broad opening of! domestic market to the world flows of goods and capital. This led to a progressive indebtedness, while reducing activity in the country or eliminating it depending on the items.
At the end of December 1983, the total external obligations (external debt plus interest arrears) were Dis. 46,000 million. The commercial banks of! foreign were the main creditors of the countries, with
outstanding obligations equivalent to Dis. 32,200 million, or 70 o/o of the total. Liabilities owed to suppliers and other private non-bank sources accounted for 10.9 o/o of total obligations, while bonds excluding Bonods and Promissory Notes accounted for 9.1 o/o. The remaining 10 or/or were constituted. For debts to bilateral and multilateral official institutions, including the IMF.
The seriousness of the situation can be assessed on the basis of some macroeconomic indicators:

The system of exchange insurance and swaps that had been implemented since 1981 implied a disguised subsidy to the private sector, specifically to foreign debtors, which would ultimately be paid by the rest of society. As of October 31, the total amount of this subsidy was estimated to be! order of 7,400 million dollars. Of this figure, two-thirds will be faced by the public sector in the coming years.

When the current authorities took office, the efforts to renegotiate the foreign debt were virtually stalled. The failure to meet the goals agreed with the International Monetary Fund for the approval of the Stand-by agreement of January 1983 determined that in the second part of the year the agreed credits would not be paid, which led to a large increase in delays in the fulfilment of obligations and a deepening of the external crisis. Added to all this is the extremely low level of available international reserves, which at the end of December 1983 totaled Dis. 102 million (I).

The accounts of! The public sector, particularly in the 1981/83 triennium, showed gaps between income and expenditure only comparable to historical records. One of the factors that contributed the most to these. The results were the low level of tax collection, basically caused by growing tax evasion and the deferral of payments of tax obligations. In 1983 the ratio of financing to the non-financial public sector to gross domestic product more than doubled that of the end of the 1980s. 70, which shows its progressive deterioration.

The Central Bank contributed to the overall fiscal deficit by transferring funds to the Treasury, virtually interest-free, as well as by granting massive subsidies to the private sector, originating from the existence of rediscount rates below the average interest rate with
minimum cash requirements, through an increase in the Monetary Regulation Account.

Economic activity measured through! Gross domestic product showed an incipient recovery in 1983. However, the feature that characterized its evolution from the middle of the previous decade was the persistent tendency to fall into recessionary situations. As a result, the gross domestic product per capita in 1983 was lower than in 1970. A sharp decline in private investment had been observed, the deterioration of the fixed capital stock and the depletion of stocks (including livestock) over several of the preceding years, which constitutes a strong conditioning factor for economic development in the long Plaza.
The industrial sector, after ten consecutive quarters of decline that began in 1980, when the opening of the domestic market through tariff reform and the delay of! exchange rate, showed some recovery in 1983 although its level of work was similar to that of 1970. This important economic sector was characterized by the existence of some activities with considerable margins of idle capacity, and by significantly higher levels of labor productivity than a decade earlier. This increase, which was accompanied by a parallel decrease in labor costs, did not translate into significant volumes of capital. The stagnation in the levels of physical and technological investment and, therefore, the growing obsolescence of a significant part of the population. productive park, was one of the fundamental features of industrial activity.
The growth of prices, which was to observe higher rates from the mid-seventies onwards, saw a sustained acceleration during the previous three years, particularly in the second half of 1983, both in terms of prices at the highest pair and at the consumer, closing the year, in the latter case, with a rate of 433.7 or/or that more than double that of December 1982 compared to the same period in 1981.

To achieve the objective of reducing inflation, the action of the economic authorities was concentrated on several fronts. On the one hand, there was a tendency to avoid the acceleration of domestic prices – through! control of those corresponding to leading companies- and the distortion of key relative prices, such as
public tariffs and interest rates, average pair of gradual adjustments. On the other, the actions of! Government were oriented to the reduction of! fiscal deficit and monetary expansion.

The policy followed in the external sector tended towards the renegotiation of the debt, proceeding in parallel to an accumulation of reserves. The favourable evolution of the balance of payments made it possible to eliminate non-refinanceable private trade arrears by mid-1984. Reserve assets increased in Dis. 773 million during the first half of 1984. In this period, the continuous expansion of exports and a stable level of imports were important, which allowed a trade surplus to be obtained in Dis. 2,600 million. The external sector showed in the second half of the year! A smaller surplus in the trade balance was raised. Imports grew and exports declined, as a result of a usual behavior in this part of the country. year, due to the lower volumes shipped and due to the significant fall in international prices. However, the significant balance achieved in the first half of the year allowed the year to close with a surplus of Dis. 3,500 million, higher than that achieved in 1983.
The balance of payments improved as the deficit that Dis had reached was reduced. 5,081 million in 1982 and Dis. 2,676 million in 1983, to Dis. 1,895 million in 1984, as a result of the favourable evolution of autonomous transactions, basically derived from
operations carried out by the private sector. The already commented supenivit of! External trade made it possible to offset the higher expenditures on financial services, since current transactions did not show significant variations with respect to 1983.
International bookings of! Central Bank reached Dis. 3,430 million, a blanket 7 or/or higher than the holdings of the same date in 1983.
The external debt at the end of 1984 would have reached a figure of about Dis. 47,800 million, which denotes a growth of only 4 o/o compared to 1983, while interest rates on the world financial markets were significantly higher than the nominal
increase in debt.
The operation of reconverting the private external debt into public debt continues, transforming the maturities with exchange insurance operated in 1982 and I983 through the delivery of Bonds and “Promissory Notes”, for a blanket
of Dis. 2,358 million. This transformation not only improved the maturity profile of part of the foreign debt, but also prevented the continued growth of the implicit subsidy in the exchange rate insurance and swap system.

Inside! framework for the renegotiation of the external debt with international creditors, the Letter of Intent and the Memorandum of Understanding presented by the economic authorities to the International Monetary Fund were prepared. At the beginning of December, a basic agreement was reached with the committee of creditor banks on the refinancing of the external debt of borrowers of the United States. public sector and of! private sector, as well as the main operational and financial characteristics of the credit facilities to be implemented in the course of 1985.

During 1984, public expenditure was reduced while tariffs were increased in real terms. These factors contributed to a significant decrease in financing needs. The relationship between this aggregate (cash concept) and GDP showed a clear decrease; • After! The maximum value reached in the fourth quarter of 1983, 15.0 o/o, fell in 1984 with an average value of 8.2 o/o.

Real interest rates of! regulated segment along! year were generally negative. The real rates corresponding to the non-regulated segments, on the other hand, show fluctuations within an increasing trend, being significantly higher than those of the regulated market in the months of April, October and December. Throughout! year the private sector gained participation in the allocation of! bank credit, going from 58.2 o/o in reiteration to 65.6 o/o in December.

The exchange rate policy continues to be characterized by the existence of a single exchange market with devaluation rates set by the government on a daily basis and which tended, particularly in the latter part of the year. to improve the real exchange rate to increase the external commercial competitiveness of our country. Exchange controls were also maintained, although some of the current conditions on imports and capital inflows were liberalized towards the end of the year.

showed in general, for the average of! year, a positive evolution. The supply of goods and services grew6 2.1 o/o; the gross domestic product increased by 2.0 o/o while imports increased by 2.7 o/o. The observed increase in consumption, 6.8 o/or, was associated with increases in real wages and employment. Exports
were 3.0 or/or lower than in 1983, as a result of the decline in services, since merchandise exports were slightly positive. Gross domestic investment continues its declining trend. This behavior was basically due to the low performance of the Pythbalic construction, a consequence of the containment of! expense, since the private sector grew6. The national production of equipment also showed increases from! second trimester.
During the year 1984 there was a growth in economic activity, in employment and a recomposition of! real wage.
In fiscal matters, significant reductions were achieved in the financing needs of! non-financial public sector (cash concept), as a proportion of! GDP. The recovery of public tariffs, a key addition in the monitoring of the relative prices of the economy, contributed to this.

An important result was achieved in the balance of trade, despite the fall in international prices of agricultural products in the latter part of the year. year, and the competition that the U.S. exerts in our main markets. DU. and the EEC, through a policy of subsidies for their internal production. The deficit of! The balance of payments was lower than in previous years and external debt only grew in nominal terms.
Notwithstanding the efforts directed towards the deceleration of inflation – price control regime, reduction of! Fiscal deficit- Prices continued to show high growth rates. Consumer and wholesale prices increased by 688.0 y/o and 625.7 o/o, respectively. There was a fall in the global liquidity ratios and the real interest rates of! regulated segment were generally negative over the course of! year.
The set of economic measures implemented in the last part of! The main objective of the year was to reduce inflation, and to improve the management of the basic variables of the economy of the economy. country, with the purpose of generating a process of productive investments whose first priority was to contribute to achieving a competitive position in the markets of the country. exterior.