A newly-released report from the Economy Ministry shows that the Russia-Ukraine war has taken a US$4.94-billion toll on Argentina’s trade balance due to a “general price shock” that mostly affected the agricultural and fuel sectors.
Using data collected in 2022, the document shows that the energy deficit was projected to be US$3.75 billion higher than the US$1.99 billion forecast before the Kremlin launched a full-scale invasion of Ukraine in February a year today. Concretely, the cost of imports reflected the surge in Bolivian gas by 114%, liquified natural gas by 233% and gasoil by 85%.
As for the agricultural sector, international prices of soy surged by 9.4%, wheat’s did so by 33.7% and corn’s by 17.8%. Argentina exported US$617 million more than the forecasted US$30.18 billion, which did not make up for the loss in energy imports.
The international price increase in grains was caused due to the restriction in Russian and Ukrainian exports. Together, these countries concentrate 30% of wheat and 20% of corn exports globally. The price of agricultural goods was also affected by price rises in natural gas,which is necessary for the production of nitrogen fertilizers.
The report disclosed that import and export transportation costs also went up. The country had forecasted a US$3 billion expenditure in freight charges before the war, but current projections are US$4.8 billion.
The war also had a fiscal cost — the report claims that 2022 energy subsidies were AR$1.79 billion, a AR$587,934 million increase from 2021.
In total, energy imports went up compared to 2021. Had the prices been the same as in 2022, total fuel imports would have been US$9.03 billion. However, projections in the report put them at US$13.27 billion, a US$4.24 surge in imports and therefore, an increase of the necessary international reserves, a scarce commodity in the country.
Calls for global financial readjustment
Today, Economy Minister Sergio Massa called for the International Monetary Fund (IMF)’s to change their surcharge policy at the G20 summit in the Indian city of Bengaluru, describing Argentina and other countries an “economic victim” of the Ukraine-Russia war.
“The same countries that call for the seriousness of the war damages to be on the agenda should ask their leaders in multilateral organizations to listen to us as economic victims of those damages,” he said.
This is not the first time Massa makes this claim. “Argentina complied with its program, but the IMF is not complying with Argentina by not reviewing how they are going to compensate the countries that paid the cost of the war [between Ukraine and Russia] with their economy,” the Minister said back in January.