2023-12-30 17:34:00
When the $2,000 bill was launched – the highest denomination in Argentina today – it was equivalent to 4 dollars. Today that value was reduced by half. for that peso devaluationand taking into account a long claim from banking entities and small businesses, The Central Bank studies issuing bills of $20,000 and $50,000. This was also anticipated by the president, Javier Mileyin statements to the media.
In May, according to a survey carried out by PERFIL, the $2000 bill was enough to buy 4 kilos of sugar; 5.7 liters of milk or 1.5 kilos of common minced meat. Now, that same bill is enough to buy 1.5 kilos of sugar; 3 liters of milk and half a kilo of common minced meat.
If it were issued today, a $20,000 bill would be enough to buy 2.8 kilos of roast; 5 kilos of dry noodles and – if you are lucky enough to get them – 10 packages of rice.
Also proof of the loss of the value of money and the purchasing power of income, particularly from pensions, is that a minimum pension would barely be equivalent to two $50,000 bills. With the payment of the January bonus, it would be three bills.
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For economist Christian Buteler, the issuance of new bills is positive, “because the highest denomination is worth two dollars, and it is very difficult to manage the daily economy in that way.” Buteler added to PERFIL that “if you want to fill the car’s tank, for example, you have to bring a lot of bills, because banks do not circulate $2000 bills. These bills are kept because they prefer to have less physical space occupied in the vaults,” he added.
Another difficulty that arose, even several months following the $2,000 bill entered circulation, is that many ATMs are still not updated to read them, which makes procedures such as deposits more difficult and cumbersome.
Regarding the printing of $20,000 and $50,000 bills, which in practice is the recognition of a price increase that does not let up, Buteler clarified that “whether this is going to be enough or not will depend on inflation. Hopefully, the bills will be released in the second half of next year, and we have to see how much they devalue until they are released. In a year, with this inflation, they will be worth less than half,” he explained.
“Let’s hope that it is enough, because that would mean that they have managed to lower inflation, but that is something that we will see over time,” concluded the economist.
For now, projections for the first half of 2024 are not encouraging. According to private studies, due to the liberalization of prices of goods, prepaid bills and services, in addition to the removal of subsidies, inflation in the first three months of the year will be double digits and similar to that of December, which closed around 30%. . Therefore, if it were issued by March, the new banknotes would have lost much of their value.
In addition to the expected inflation, the other difficulty for printing banknotes is funds: Argentina owes 30 million to different external suppliers who are dedicated to printing $1,000 and $2,000 bills.
Small and medium-sized companies welcome the initiative. “We have repeatedly insisted on the importance of printing higher denomination bills. For several reasons, among them the issue of security,” Fabián Xavier Castillo, president of the Federation of Commerce and Industry of the Autonomous City of Buenos Aires (Fecoba), explained to PERFIL. “The other issue is the issue of deposits. What has been constantly happening at ATMs is that with that volume the money runs out quickly. We are constantly seeing queues at ATMs both to withdraw and deposit and this is also a very difficult issue,” he added. Businessmen hope that this measure will be taken “with haste” given the rapid loss of purchasing power of money.
Some economists warn that in 2024 inflation would exceed 300%.
This week, the Government made official the appointment of Daniel Méndez as president of the Mint, one of the State companies that might be privatized, according to the omnibus bill sent by President Javier Milei to Congress.
Meanwhile, the Mint will be in charge of issuing the new banknotes that might be officially launched by mid-year. By 2024, some economists warn that inflation might reach 220 and even exceed 300%, and most of that figure will be concentrated in the first half.
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