The decree got signed by the Executive Power on Friday, September 17. Economists are afraid of the inflationary consequences that would come with the measure.
A decree signed by the president of Argentina, Alberto Fernández, on the night of Friday, September 17, authorized the issuance of 422 billion pesos (ARS), which is equivalent to USD 2.28 billion at market price.
The Government desires to implement a monetary issue to finance the fiscal deficit. This new issue would affect the remainder of 2021 or the upcoming year.
The measure got signed surprisingly while the new cabinet of ministers received its announcement, a fact that caught the attention of the press. This happened after the massive resignations of officials, and the defeat of the ruling party in the primary legislative elections on Sunday, September 12.
The economist Matías Surt, from the consulting firm Invecq, speculates that they will manage billions of pesos, and try to purchase the November vote. According to him, to achieve this goal, the current administration does not mind keeping the fueling of inflation.
The professional also explained that the Treasury could sell special drawing rights (SDR) from the IMF to the Central Bank (BCRA) due to the presidential decree.
When the time comes to pay the debt to the IMF, the Treasury will take the SDR from the BCRA and bring it a non-transferable bill that, according to Surt, would be a simple piece of paper.
An interesting Increase in the minimum wage, bonds, and credits subsidized by the actual government
This week, the national administration seems to have started its plan to give away money and put it inside people’s pockets, with little more than a month left before the legislative elections on November 14.
According to local press reports, a package of economic measures announced in the coming days would include a high peak in the minimum wage.
The measure also adds bonuses for retirees and pensioners and 12-month interest-free loans subsidized by the administration.
In this predictably inflationary environment for Argentina, the citizens who have savings capacity in that South American nation intend to protect their assets in stronger currencies, with the dollar being the most used alternative.
The restrictions to access the US currency (no more than USD 200 per month can get legally acquired) had made many citizens describe bitcoin (BTC) as a primordial tool to protect their assets.
This protection intends to save citizens’ finances from the constant devaluation that the national currency has been experiencing in the late years.
Unlike what happens with fiat money, which can get issued inorganically by national governments, BTC has a predefined issuance rate, and its currency would never surpass 21 million units.
In the medium and long term, and beyond the high volatility in shorter periods, the price of BTC increases; this increase happens due to the high peak in demand and its subsequent supply.
By: Jenson Nuñez
