Argentina President Javier Milei is about to launch a new package of tax reforms to bring back to the formal economy about $ 270 billion that are now stored “under the mattresses” – an expression used to describe the mountain of dollars kept outside the financial system by suspicious Argentines of local currency, banks and governments. The information is from Financial Times.
“Who hid money is not a criminal, he is hero who managed to escape the children of the politicians who wanted to screw you with inflation,” Milei said last week during a business conference. “We are relaxing the rules so that no one is persecuted for using the dollars they have kept.”
According to a report by FTthe measure aims to make the rigid controls on tax evasion and capital imposed over the last decades, which have pushed many Argentines into the black exchange market. Since 2011, the country imposes severe restrictions on the purchase of dollars, which encouraged the proliferation of the so -called “Blue dollar”, quoted outside the legal system. With inflation reaching 289% last year, keeping dollars at home became a survival practice for millions.
Almost half of the Argentine workforce acts in informality, and even formal employees often receive part of the salaries “on the outside”. Large purchases, such as cars and real estate, are commonly made in cash, often with amounts declared well below the paid.
Milei’s strategy now seeks to legalize part of these resources without opening money laundering.
The movement occurs at a politically favorable moment, after his party, La Libertad Avanza (LLA) ,. The result represented a significant defeat for the Pro, a caption that had controlled the capital since 2007.
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In addition to political strengthening, Milei also has the fiscal impetus of the recent agreement signed with the International Monetary Fund (IMF), which recognized the government’s efforts to balance public accounts and reinforce the country’s credibility.
Still according to the Financial Timesthe President bets on rehabilitation of these resources as an alternative to moving the economy in the coming months, given the difficulties of moving forward with structural reforms before October legislative elections. The legalization of dollars informally would allow us to increase consumption without resorting to the expansion of public spending – something that could compromise the ongoing adjustment.
