MercoPress. South Atlantic News Agency

Inflation forces Argentina to urgent import of note bills from Brazil

Vice President Miguel Angel Pesce

A shortage of bills that has led to lines and protests outside Argentine banks since mid-December may be resolved by next week after the country boosted imports of notes printed in Brazil.

Argentina will import an additional 3 billion pesos (750 million US dollars) in 100-peso notes from state-owned mint Cada de Moeda do Brasil, central bank President Mercedes Marco del Pont said Monday. Argentina originally signed an accord in November with the Rio de Janeiro-based mint to produce 130 million 100- peso notes.

Argentine banks have struggled since last month to provide enough bills to customers during the peak holiday season. Provincial bank Banco de Cordoba SA last week asked the local government to let it pay public workers’ salaries in two installments in order to meet demand for bills.

A 25% annual inflation rate in Latin America’s second-biggest economy is undermining the value of Argentina’s currency, leading to a higher demand for pesos, said Maximiliano Castillo Carrillo, a former manager of macroeconomic analysis at the central bank.

“It’s because of inflation that people require more bills” said Castillo, who is the director of economic research company ACM in Buenos Aires. “The government doesn’t want to print bills of higher denomination”.

ATMs at Banco de Cordoba were functioning with cash 74% of the time in December, compared with 86% in November, the bank said.

The shortages of bills is a result of a faster economic growth, which is leading to higher consumption, said an official at the central bank, who asked not to be identified because he isn’t allowed to speak publicly. Argentina’s economy was forecast to grow 9% last year, the most since 2005, according to the central bank.