BUENOS AIRES Nov 21 Argentina's government is
mulling further steps to halt the flight of the central bank's
foreign reserves, President Cristina Fernandez's new cabinet
members said on Thursday.
Foreign reserves have shrunk by 26 percent since late 2012
to below $32 billion as the government uses them to pay
bondholders, import energy and to intervene in the currency
market to prop up the official value of the peso. Reserves are
also depleted by Argentines buying goods overseas.
Cabinet Chief Jorge Capitanich said ministers were working
on the reserves issue, though the new economy minister did not
announce any new measures as some had expected.
Analysts suspect existing restrictions, including higher
taxes on using credit cards outside Argentina, will be
intensified. Currency controls introduced in 2011 have led
Argentines to shop overseas with credit cards, which have to be
paid in U.S. dollars and are further draining reserves.
"Taking care of our reserves does not mean destining them
for luxury goods but rather promoting industrialization,"
Capitanich told journalists.
Economy Minister Axel Kicillof said the government would
continue to encourage domestic industrial production and a more
equal distribution of wealth in Latin America's third-largest
economy, while seeking to solve the dollar shortage.
"We aren't going to do anything that generates brusque
changes in the economy," he said in his first press conference
as minister following a cabinet reshuffle this week. He said
reserves were at "consistent levels."
The local press has speculated that Kicillof, a former
academic who wrote about the theories of economists including
John Maynard Keynes and Karl Marx, will try to implement a
scheme of multiple exchange rates like fellow South American
Argentina's government has allowed the peso to depreciate
slightly in recent months, but still keeps it overvalued to
avoid pressuring prices in a country where private economists
say inflation is around 25 percent.
The combination of high inflation and the overvalued
exchange rate, which pushes the price of imported goods down but
the price of exports up, are squeezing firms in the world's No.
3 corn and soybean exporter.
"The exchange rate is part of an integral program with lots
of instruments and we have to find a way to generate more
dollars," Kicillof said.
The official peso and black market rate as measured by
Reuters both weakened ahead of Kicillof's press conference and
curbed losses after no new measures were announced.
Fernandez, in a fiery speech late on Wednesday, promised
cheering supporters in the presidential palace she would
"deepen" the current economic model, which is based on state
intervention in most aspects of the economy and promoting
She has made no mention of her supporter's heavy losses in
congressional elections on Oct. 27 that ended her chances of
securing a change to the constitution that would have enabled
her to run for a third term in 2015.