Raul Amil has been in the auto parts business in Argentina for more than 25 years. He has lived through numerous economic crises in a country infamous for its seemingly constant crashes. But he says that what Argentina is living through now is unprecedented.
Amil is hardly alone.
Business leaders across Argentina are scrambling, trying to deal with a fresh rash of import restrictions at a time when the government is trying to hold onto precious few hard currency reserves. The government is making it difficult to buy products from abroad and complicating life for companies trying to keep supplies stocked, which some warn could lead to shortages.
“Seeing the problems that exist today, you don’t have to be a genius to realize that sooner or later there will be issues,” Amil, who heads Ventalum, a manufacturer of aluminum auto parts that has 180 employees.
Juan Pablo Ravazzano, who heads the Argentine Chamber of Animal Nutrition Companies (CAENA), is one of the many business leaders in Argentina counting down the days until he says shortages will start becoming a reality.
“If it continues this way, in 45 to 60 days we will have shortages of raw materials,” including amino acids, vitamins and minerals needed to manufacture animal feed and pet food, Ravazzano warned.
Import restrictions are nothing new in Argentina, a country that has long suffered from a chronic shortage of hard currency, which has only worsened in recent months as pressure on the local peso currency rises amid high inflation and soaring energy import costs.
Yet the government of President Alberto Fernández has tightened the screws on imports even further recently as it struggles to meet Central Bank reserve requirements that are part of a recent deal with the International Monetary Fund to restructure $44 billion in debt.
The increased controls on imports was one of the last official acts of Martín Guzmán before he resigned as economy minister on July 2 as tensions within the governing alliance burst out in the open.
His successor, Silvina Batakis, has vowed to continue with the government’s economic plan as she faces numerous challenges, including trying to tame one of the world’s highest inflation rates that is running at more than 60 percent, while the peso continues to depreciate in the financial market amid stringent capital controls.
“The Central Bank doesn’t have dollars. It doesn’t have them now because it has an exchange rate system that is unsustainable,” Marcelo Elizondo, an economic analyst who specializes in international trade and runs the DNI consultancy, said.
Argentines are so distrustful of their currency that they save in dollars but the government has placed strict restrictions on access to the U.S. currency. The official exchange rate is running at around half of what it costs to obtain dollars through operations in the financial market.
“The restrictions are basically a way to prevent the increase in the exchange rate so that it does not affect the inflation rate,” Elizondo said. “Clearly, the economy is very affected.”
That means companies must rely on the Central Bank to obtain permission to buy supplies that are critical to their operation.
“The Central Bank has the power to decide who will import and who will not … and that isn’t normal,” said Daniel Rosato, the president of Rosato, which manufactures toilet paper and paper towels in Buenos Aires province. “If that isn’t resolved quickly it will generate shortages, problems with productivity, companies that will have to stop because of a lack of supplies.”
The government has vehemently denied shortages are a widespread problem even as it recognized that there may be cases where some products are difficult to obtain.
“There may be isolated cases of products missing from some shelves,” Gabriela Cerruti, the presidential spokeswoman, said Thursday in a news conference. “But there are no huge situations of missing products anywhere nor any circumstance that would lead us to think ... of shortages.”
Business leaders often find the import blocks particularly frustrating because they can prevent manufacturers from operating at full capacity and generating just the kind of dollars and jobs that the country needs.
“The manufacturing sector exited the pandemic in a good position, with a growth of 10%. But these restrictive measures due to a lack of hard currency can lead to a decline in growth,” said Alejandro Bartalini, the owner of Metalcrom, which manufactures parts for the farm and oil sectors. “Today we’re operating at 80, 90% of our productive capacity.”
Amil, who runs the autoparts company, says that “the sad thing about this situation is that demand exists” and the sector exports a majority of its production.
“This year we thought we were going to grow 20%, but now there is a large question mark due to these restrictions,” he said. “This is a crisis of supply, not demand.”
Martín Cabrales, vice president of coffee company Cabrales, says he has never seen this level of restrictions on imports in the more than 20 years he has been involved in the family business that has long relied on buying material from abroad because Argentina is not a coffee producer.
“The serious thing here is that they are limiting the raw material, coffee is a raw material,” he said. “We think the government needs to prioritize raw materials so manufacturing does not stop.”
Cabrales says that with its restrictions, the government fails to take into account global dynamics in the market because it provides quotas to access the official dollar market based on what a company imported last year in dollar terms. But the international price of coffee more than doubled in the last year and a half.
Cabrales is optimistic the issue “will be resolved” eventually “but in the meantime there could be shortages.”
Amid the worries about supplies, some are trying to see the positive side of the restrictions.
Sergio Asato, who owns the Japanese restaurant Social Sushi Izkaya, said that with prices of imported salmon, which is by far the most popular fish for sushi here, almost doubling recently, it is the perfect opportunity for Argentines to expand their palates.
“We’re trying to help people get to know all the varieties that we have in the Argentine sea,” Asato said. “This is an opportunity, if there’s no salmon we can start to work on publicizing other species.”
