The Central Bank of the Argentine Republic (BCRA) ordered this Tuesday to raise 200 basis points the monetary policy rate that is set through the 28-day Liquidity Letters (Leliq), which went from 42.5% to 44.5% of the Annual Nominal Rate (TNA), which implies that fixed-term deposits of human persons at 30 days will now be 43.5% TNA and 53.3% Annual Effective Rate (TEA).
To prevent the rise in the price of money from affecting credit for production, the Central also extended until September 30 the Financing Line for Productive Investment (LFIP), the main line of credit to MSMEs that, until now, accumulates disbursements of nearly $1.7 trillion, to a total of approximately 219,000 companies.
This is the third rise in interest rates so far in 2022which had started at 38% and then rose 200 basis points to 40% in January, then increased another 250 basis points to 42.5% in February and, now, to 44.5%, before the target of calibrating an interest rate more in line with inflation levels.
“In its Objectives and Plans for 2022, the BCRA reported that it was beginning to leave behind the period of exceptional policies generated by the pandemic and was resuming the guidelines set forth in January 2020. In this sense, the rate hikes occurred in January and February and now said strategy is adjusted in order to establish a policy interest rate path in order to tend towards positive real returns on investments in local currency and to preserve monetary and exchange stability,” the monetary authority said in a statement. .
Among them, he listed the rise in prices of raw materials and inputs such as wheat, corn, soybeans, oil, gas and fertilizers that “directly and indirectly affect prices in Argentina” and that, therefore, “the national government is developing measures aimed at mitigating the impact on local prices”.
“The rate hikes took place in January and February and now said strategy is being adjusted in order to establish a policy interest rate path in order to tend towards positive real returns on investments in local currency and to preserve monetary stability. and I would changeBCRA
With regard to time deposits in pesos, the rise in the interest rate implies that, for individuals, the The new floor will be 43.5% per year for 30-day deposits up to 10 million pesos, which represents a yield of 53.3% annual effective rate.
For the rest of the private sector deposits, the guaranteed minimum rate is established at 41.5%, which represents an Annual Effective Rate of 50.4%.
Even so, the BCRA assured that “active interest rates remain at favorable levels, especially for investment and production, and the Mipyme sector”, while anticipating that “it will continue to regulate certain key rates for the consumption of the families”.
In this sense, the extension of the LFIP establishes that financial entities must maintain a balance of financing within this line that is equivalent to, at least, 7.5% of their deposits from the non-financial private sector in pesos, calculated based on of the monthly average of daily balances as of March 2022.
“This line begins a new stage where, once the central objective of protecting the productive apparatus during the pandemic has been fulfilled, it is now aimed at stimulating the production of the sector as a way of contributing to a greater supply to control inflation,” he said. the entity chaired by Miguel Pesce.
As detailed by the BCRA, the preferential conditions of the credits granted within the framework of the LFIP allowed that, in year-on-year terms and at constant prices, the balance of loans to Mipymes registered a growth of around 20%.
Between October 1, 2021 and February 28, 2022, loans through the LFIP reached $634,000 million, of which -reported by the BCRA- 35% corresponded to investment projects and the rest to working capital.
“This balance represented two thirds of loans to Mipymes and around 40% of total commercial loans,” concluded the BCRA.
