Argentina Asks Oil Firms to Fund Their Own Imports Amid Forex Shortage

(Reuters, 24.May.2023) — The Argentine government has asked oil companies to finance their own imports for 90 days due to the shortage of foreign currency at the country’s central bank, an official source familiar with the matter said on Wednesday.

The request follows a decision from the government to request companies to obtain their own financing through international banks or parent companies to avoid resorting to the exchange market to access dollars.

The South American country, one of the world’s largest food exporters, has been severely hit by a recent drought and is battling tumbling foreign reserves that is threatening its ability to meet payments.

It also must rebuild its reserves to cover trade costs and future debt repayments, as well as to meet economic targets under its $44 billion loan program with the International Monetary Fund (IMF).

The oil sector is one of the country’s industries which could more easily access the exchange market in order to import energy and aid the development of Argentina’s hydrocarbon production, notably that from the world’s second largest shale gas reserve – the Vaca Muerta shale formation.

A source from the central bank said it would call a meeting with representatives from all sectors to inform them about the new “voluntary” mechanism.

Argentina’s energy trade balance could reach break-even this year, according to government forecasts, following a deficit of some $4.5 billion in 2022.

Argentina’s energy secretariat declined to comment on the matter. The country’s oil companies, such as Axion y Raizen, did not immediately respond to a request for comment.


Reporting by Eliana Raszewski; Writing by Carolina Pulice Editing by Marguerita Choy

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