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ECONOMY | 24-05-2023 10:43

Argentina's government hauls in oil firms for meeting amid dollar shortage

Officials set to meet with oil firms to discuss how imports must be financed amid a severe shortage of dollars.

Argentine officials plan to meet Wednesday morning with some oil companies operating in the country to discuss how imports must be financed amid a severe shortage of dollars, according to three people with direct knowledge of the matter. 

Central Bank President Miguel Pesce and Energy Secretary Flavia Royón plan to meet with executives of Raizen, Axion, YPF and Trafigura Wednesday morning around 9am local time at the monetary authority to discuss recently announced changes to financing imports.  

A Central Bank spokesman and press offices for all four companies didn’t respond to a request for comment after business hours Tuesday. 

Last week, the Central Bank tightened import controls by requiring many industries to finance their own imports instead of tapping the Central Bank’s reserves via the official foreign exchange market. Oil producers have thus far been able to keep using the reserves, though officials are likely to discuss whether that will change, two of the people said.

The nation has already spent all of its liquid international reserves, plus another estimated US$1 billion, according to Buenos Aires-based consulting firm 1816 Economía y Estrategia. A renewed peso sell-off in recent months has pushed Argentina to seek larger disbursements or new loans to shore up reserves from Brazil, China and the International Monetary Fund.

Without easy-to-spend cash on hand, questions are swirling about how much longer the government can continue to defend the peso from an all-out collapse. At risk is a currency devaluation that stands to fan 109 percent inflation and exacerbate high levels of social unrest ahead of October’s presidential elections.

by Ignacio Olivera Doll & Jonathan Gilbert, Bloomberg

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