Monthly Monetary Report

Summary

Monetary aggregates continued to decelerate, showing a sustained decline in terms of output from the peak level reached in 2020. The private M3 to GDP ratio stands at 18.4%, accumulating a fall of 6 p.p. since June last year and standing at a level lower than the highs prior to the pandemic period. For its part, private M2 in terms of GDP reached 11.1%, more than 2 p.p. below the highs of the 2005-2019 period and at a level similar to that observed during 2016-2017. Finally, the circulating ratio in public power to GDP stands at 4.2%, closer and closer to the historic low of 2019.

Seasonally adjusted, the broad monetary aggregate (private M3) continued to show a limited variation (0.2%) in real terms. Within it, the only factor of expansion was, again, time deposits. These placements completed the first quarter of the year with a positive monthly growth rate in real terms: the increase recorded in March was 1.9%, thus reaching an average expansion rate of 2.6% in the quarter. The year-on-year variation at constant values increased 1.3 p.p. compared to the previous month and stood at 22%, a value close to the maximum recorded for the period between 2004 and 2019.

Although the month’s growth was mainly explained by deposits in pesos, deposits denominated in UVA continued to grow at a good pace. The latter reached a balance of $109,023 million at the end of March, which implied an increase in real terms of 20.6% compared to February 28. This increase was made up of both traditional placements and those with early cancellation options, which grew 16.7% and 35.7%, respectively, in the month.

Loans in pesos to the private sector, in real and seasonally adjusted terms, presented a contraction of 1.6% in March. The moderation in loan growth occurs in a context of gradual recovery in economic activity, which has led to lower demand for credit lines created during the health emergency, allowing the BCRA to focus credit assistance efforts on the sectors that are lagging behind. Thus, commercial lines have been making a negative contribution to the variation of the month. However, in year-on-year terms, they grew 22.6% at constant prices. Although they reflected a marked slowdown, in large part, it is explained by a greater basis of comparison, since credit growth accelerated since March 2020. Differentiating by type of company, practically all the slowdown responded to the large company segment, since MSMEs maintained a relatively stable real growth rate of around 65% y.o.y.

The Financing Line for Productive Investment has been a widely used vehicle to channel commercial credit to MSMEs. At the end of March, loans for approximately $411,700 million had been granted, 32% more than in the same period in February. In March, the BCRA decided to extend the validity of the LFIP until the end of September.

On the other hand, loans with collateral and credit card financing contributed positively to the monthly variation. One of the factors that affects the evolution of this last line is the turnover within the framework of the “Ahora 12” program. Recently, the Ministry of Domestic Trade extended it until July 31 to pay for purchases financed in 3, 6, 12 or 18 fixed monthly installments with a credit card.

Among its main modifications is the elimination of the 3-month grace period as well as an adjustment in financing conditions.