For the national deputy Luciano Laspina, the Central Bank of Argentina (BCRA) “is violating its Organic Charter and putting Argentines on the verge of super-inflation.”
The official, a member of the Together for Change bloc, tweeted that, since the reform that the Organic Charter had in 2012, the BCRA is “the Treasury’s relief wheel”, since it allows it to be financed with reserves.
Laspina adds that this reform, in any case, put some limits on the monetary financing of the banking entity to the national Treasury. He refers to article 20 which says, among other things, the following:
«The Bank may make transitory advances to the national government up to an amount equivalent to 12% of the monetary base. (…) It may also grant advances up to an amount that does not exceed 10% of the cash resources that the national government has obtained in the last 12 months.”
(Excerpt from article 20 of the BCRA Organic Charter).
“They are lax limits, but limits after all, that the BCRA has decided to ignore”, maintains the also economist. As he explains, “the BCRA is bypassing those limits to indirectly finance the Treasury. In recent days, it has been buying Treasury debt for more than ARS 600 billion.” That figure (equivalent to about USD 2.6 billion) would be 16% of Argentina’s monetary base.
To bypass the self-imposed limits, according to the interpretation of the deputy, the BCRA abuses the Article 18 of the Organic Charter. This establishes that the financial entity can buy and sell public securities in the market “for purposes of monetary, exchange, financial and credit regulation.”
“It is evident that these purchases of securities are not intended to regulate the money supply, nor the exchange rate, nor credit. (…) It is not allowed to finance a crisis of illiquidity or insolvency of the National Treasury with an inflationary tax. Because, in such a case, the limits imposed by article 20 would become abstract, useless and irrelevant”.
Luciano Laspina, national deputy of Argentina.
By way of conclusion, this 49-year-old from Rosario, who has legislative experience since 2014, maintains: «the National State must take forceful and urgent measures to recover confidence in its fiscal solvency, starting by reducing the disaster in public spending that generated in the first half of the year. And the BCRA must comply with its Organic Charter, refraining from continuing to monetize the irrational exuberance of national government spending, circumventing the limits of article 20.
For Laspin, Only if these two conditions are met, “will we Argentines be prevented from suffering super-inflation in the future”.
Argentina could have more than 72% inflation this year
In accordance with private consultants, inflation in June will be close to that registered in May (5.1% monthly). In any case, it will have to wait until July 14 for the Institute of Statistics and Censuses (INDEC) to publish its official data. According to the specialized finance media, Bloomberg, year-on-year inflation at the end of 2022 could exceed 72%.
All this occurs in a context of strong currency devaluation. As CriptoNoticias reported, these days, the price of the dollar (measured in Argentine pesos) reaches all-time highs.