Argentina is extending the time it takes to approve import permits in an effort to shore up central bank reserves that have dwindled to a six-year low, according to Argentina’s biggest importers’ association.
“Imports have become the variable of adjustment of this model of currency restrictions,” Miguel Ponce, an official at Cira, which represents companies that account for 80 percent of the country’s imports, said in a telephone interview from Buenos Aires. “The most affected by these delays are workers, small and medium-sized companies and industrial production, as the lack of parts and machinery is causing a decline in some industries.”
Argentina is blocking imports from Brazil, its biggest trading partner, Valor Economico reported today. President Cristina Fernandez de Kirchner started tightening import restrictions in 2011 to protect reserves after capital outflows jumped. She also banned most dollar purchases. Her efforts didn’t prevent central bank holdings from dropping to $37 billion on Aug. 23, the lowest since April 2007.
Industrial output expanded 2.8 percent in July from a year earlier, the slowest growth since April, according to the national statistics agency.
A weakening real, which has tumbled 14.1 percent against the dollar this year, is making Argentine exports to Brazil less competitive, according to Cristiano Rattazzi, president of Fiat Auto Argentina SA. Argentina’s peso has fallen 12.7 percent in the same period.
“A real at 2.4 per dollar is worrisome for Argentina” Rattazzi told reporters in Buenos Aires on Aug. 22. “A year ago, there were lots of investors here who were interested in auto part production. Today you won’t find as many.”