After importing 1.4 billion banknotes from China, the government wants to privatize the mint

Javier Milei did not keep his promise to dollarize the economy or close the central bank, but he could content himself with stopping the “little machine” of printing, at least his own. Since his inauguration in December 2023 The Mint stopped supplying banknotes entered the market to import them from countries such as China and is now trying to complete their privatization.

The organization, which reports to the Ministry of Economy, intervened in November last year. The Mendoza Array Pedro Cavagnaro reduced the workforce from 1,300 to around 600 employees through voluntary retirements and layoff telegrams with compensation of 50% and paralyzed banknote printing, although two new German machines were ready for use.

The next step will be determined next week, when the last 120-day extension of the intervention set on August 28 expires. “It is likely that once the intervention is completed, a board will be appointed and privatization will continue.but there is no defined timeline yet,” government sources confirmed.

Responsible for driving this process forward is the State Transformation Agency, the body responsible for privatizations, headed by Diego Chaher, a man of presidential adviser Santiago Caputo. This is how much money the government could receive after handing over the metallurgical company IMPSA and four Patagonian hydroelectric power plants for a total of $1.2 billion.

During his trips to Mendoza in recent weeks, Cavagnaro met with several interested parties about the future of the organization, including ARCA authorities, customs and ATE representatives. He informed the latter that he was suspending layoffs for Christmas. Potential suppliers such as the English company De la Rue and several creditors were also included..

The government owes more than $300 million for inks, banknotes and other imported goods during the administration of Alberto Fernández and Milei. As Clarin learned, The order of the Minister of Economy Luis Caputo stipulates that after almost three years he will repay the capital owed in up to 12 installmentsdepending on the size of the supplier, without cover for interest or late payment.

The creditors’ club consists of the National Coin and Stamp Factory of Spain -made popular by the La casa de papel series-, its Brazilian counterpart, the Swiss-German global banknote printer manufacturer KBA, the German ink manufacturer GSI, the American Crane, the French Oberthur, the Chinese state printing company China Banknote Printing and Minting Corporationand the Argentine Permaquim.

The expansion of payments sparked concern in European embassies, according to sources familiar with the matter. And that was striking The Swiss ink manufacturer SICPA was the only one which raised around $80 million in government bonds last year. Cavagnaro has received them twice in the last 30 days. The idea is to transfer the machine that prints stamps on cigarette packs to ARCA.

There are other, less visible tensions. According to the Central Bank In the last two years, the government imported at least 1,420 million banknotes with a total cost of $72 million. China sold $10,000 and $20,000 bills worth $48 to $58 per thousand units, edging out other competitors. Crane’s subsidiary in Malta could only print 190 million banknotes, the remaining 15%. “The tenders are based on price,” sources in the economic team said.

The Chinese move is causing confusion in the industry, where they assure it It is difficult to determine that a country has shifted the production of a considered strategic commodity such as banknotes to China. Not even Venezuela and Cuba. Only Nepal, Hong Kong and Macau do this. And countries without mints such as Uruguay, Paraguay, Bolivia and the Dominican Republic are unable to keep up.

They see this in the local financial system Beijing became a monopolistic supplier with “dumping” prices (below cost). Another front that would have caused unrest in the United States. “The Chinese make strategic and geopolitical decisions, they are not interested in making money, they can sell at a loss to enter a new market, and even more so when it comes to banknotes,” said a source.

According to sources close to the Mint, the Maltese $10,000 notes and the Chinese $20,000 notes presented a complication: their expiration. On the market they claim that they are of lower quality than the European ones. However, at three banks they said they had not noticed any deterioration. The official plan calls for China’s stocks to last until June 2026, although ATE warns that the new exchange rate band system, which will be introduced in January, will bring greater demand for pesos than expected.

Faced with the impossibility of meeting the demand for pesos due to rising inflation, Alberto Fernández began importing banknotes from Brazil, Germany, France, Malta and China. He also bought two new machines from Germany: The first arrived in 2022 and the second left customs two days before Javier Milei took office without paying all the bills. The printer is still stored in a box at the main print shop in Retiro.

Argentina is one of the few privileged countries in the region with a mint for 150 years. The others are Brazil, Mexico and Chile. With the arrival of the new government, Federico Rumpfenegger eliminated the prerogative that obliged the Central Bank to purchase 100% of banknote production from the organization and began to hold public tenders, excluding the Mint from them.

After the adoption of the Basic Law, the government converted the company from a state-owned company to a single-stock company (SAU). Printing of the $1,000 and $2,000 bills was stopped and the notes were restructured because of their oversize.that the two factories had high operating costs, that there was a surplus of imported machinery and that the company was heavily in debt.

The restructuring included the transfer of real estate for execution to the AABE and the transfer of functions to other areas: tax control and traceability tools such as cigarette brands to ARCA, the production of passports to RENAPER and the operation of two virtual wallets to ARSAT. Therefore, the Mint’s activity was limited to the destruction of the 50, 100, 200 and 500 peso bills printed in 2017.