Buenos Aires — The Argentine government has flooded the streets with pesos in the run-up to Sunday’s elections, putting into circulation more than 600 million banknotes in the last six weeks and more than 1.83 billion in the last 12 months, twice the annual production capacity of the Argentine mint (Casa de Moneda).
With only a few days to go before the general elections, the number of banknotes in circulation in Argentina has hit a record 9.15 billion.
But this will only accelerate after the elections, or at least that seems to be the intention of the government’s economic team, which continues to demand banknotes from a CMA that has been printing them at full steam for months and still cannot keep up with the demand, and which has placed an order for the air transportation of 449 boxes of banknotes from Leipzig in Germany.
The mint’s document, published on Wednesday, also specifies that this batch of 107 tons of banknotes must be transported on a charter flight before the end of the year, with some 89 million banknotes set to arrive in the country in almost 450 boxes.
The opening of the bidding for the banknote printing is scheduled for Monday, October 23, at 09:30 hours, just hours after the election results will be known. The country’s next president will take office on December 10.
When contacted by Bloomberg Línea, the Casa de Moneda clarified that although the banknotes will be printed in Germany, this does not imply that it has signed a new banknote printing agreement with a printing house in that country. As happened with the banknotes coming from France and Malta, they point out, it was the Spanish mint which subcontracted the German printer.
CMA’s only current contracts continue to be with the Spanish mint, the Brazilian mint and with the Banknote Printing And Minting Corporation of China.
A record number of banknotes
The more than 9.15 billion banknotes circulating in the country, according to the latest official statistics, represent an increase of 601.6 million banknotes with respect to the 8.54 billion circulating at the beginning of September. Furthermore, they are more than 1 billion banknotes more than the quantity circulating in Argentina at the beginning of this year.
These figures exceed CMA’s production capacity, which, according to industry sources, is around 700 to 900 million banknotes per year, and which is why the government has been importing pesos printed in three different continents.
At the beginning of October, newspaper La Nación reported that in order to meet the need for pesos in the run-up to the elections, the government ordered an emergency shipment of 2 billion 2,000-peso bills from China, which will arrive in two ships to the port of Buenos Aires at the beginning of December.
The Argentine mint told Bloomberg Línea that it could neither confirm nor deny the information regarding the amount of banknotes that will enter the country in the next few weeks, and stated that maritime transportation will be used to transport the new 2,000-peso banknotes to be printed by the Banknote Printing And Minting Corporation of China.
Shipping implies a 90% reduction in logistics and transportation costs, the CMA said.
1,000-peso bills represent half of those in circulation
According to the Argentina central bank’s official statistics, more than half of the banknotes circulating in the country are of 1,000-peso denomination, and of the 9.15 billion banknotes reported to e in circulation in mid-October, 4.64 billion are of the 1,000-peso value.
Of the 2,000-peso bills, only 160 million are in circulation, 1.7% of the total, while 100-peso bills, which one year ago were the most common in Argentina, now total around 1.46 billion, or 16% of the total.
At the end of 2018, almost six out of every 10 banknotes in Argentina were of 100-peso denomination.
The circulation of a record volume of pesos is a result of the inflation hitting the country, and of the government’s refusal to issue a higher denomination bill. The 2,000-peso bill, which entered into circulation in May, is barely equivalent to $2.20 at the parallel exchange rate of October 18, and is also a reflection of the government’s need to turn around the electoral result obtained in the primaries.
In late August and early September the government announced a broad package of relief measures that private and opposition economists were quick to baptize as “the 2023 money plan″, referring to statements made by the former Minister of Health, Daniel Gollán, who after the defeat in the 2021 mid-term primary elections had said that “with a little more money in our pockets” the result could have been different.