Summary
The broad monetary aggregate (private M3) at constant prices continued to decline. In real terms and adjusted for seasonality (s.e.), it would have registered a decrease of 0.6% in May.
Within it, the fall was explained by the behavior of time deposits which, for the first time in the year, contributed negatively to the variation of private M3.
The behavior of the means of payment was influenced by the extraordinary subsidy granted by the National Government of $15,000 per family to the most vulnerable social sectors of the Metropolitan Area of Buenos Aires (AMBA). On the one hand, it led to demand deposits reducing the rate of decline to constant prices in the month and, on the other hand, the more intensive use of cash by these agents explained the growth in working capital demand.
Time deposits in pesos of the private sector moderated their growth throughout the month. In real terms, they presented a slight monthly drop (0.9%), although they registered a year-on-year expansion of 19%. The lower dynamism shown by these placements was explained by the behavior of the wholesale segment (more than $20 million).
Within time deposits, those arranged in UVA continued to grow at high rates and reached an average monthly balance of $141,200 million. Thus, as of May, the balance of these instruments more than doubled last December’s record and was 20.6% more than in April (16.3% in real terms).
The BCRA kept the minimum fixed-term interest rates and monetary policy rates unchanged, in line with the importance of accompanying the process of normalization of economic activity. It is worth noting the existence of savings alternatives with inflation coverage such as UVA deposits, which, as mentioned, have been showing significant growth. Loans in pesos to the private sector would have registered a contraction of 2.6% at constant prices and without seasonality. The slowdown in lending observed in recent months is almost entirely due to the evolution of commercial lines and was concentrated in the large business segment.
The Financing Line for Productive Investment continued to be the main vehicle used to channel commercial credit to MSMEs. At the end of May, loans granted under the LFIP totaled approximately $587 billion. As for the destinations of these funds, around 83% of the total disbursed corresponds to the financing of working capital and the rest to the line that finances investment projects.
