central bank of argentina reported Foreign currency deposits soared by about $8 billion on Monday under liberal President Javier Millay's policies.
When Milay took office in December, foreign currency deposits stood at $16.5 billion. Ten months later, Argentina has $24 billion in foreign currency, including dollars that Argentines once stashed or hoarded overseas.
Millay provided Argentines will be able to bring up to $100,000 from their cash stash into the banking system without penalty, provided they make the deposit by September 30th. Argentine banks report opening 100,000 tax amnesty accounts since the program took effect in July, with at least $2 billion deposited in those accounts. . deposit.
Deposits are reportedly accelerating as the end of the amnesty period approaches, but even the impressive numbers reported on Monday show that Argentines were fleeing a hyperinflationary socialist economy before Millay came on the scene. It's just a drop in the ocean of cash. The Argentinian people hid Estimation Over the years, $258 billion in U.S. currency has flown out of the financial system, sometimes literally by stuffing mattresses with bills and shoving wads of cash into safe deposit boxes.
Most Argentineans are paid in local pesos, but for years they have been buying dollars as quickly as possible and hiding them where the government can't find them. Millay said During the election campaign, he said he wanted to abolish the peso completely and dollarize Argentina's economy.
In addition to allowing citizens to openly use the currency of their choice, the liberal-reformist president said dollarization would force Argentina's banks to print large amounts of money every time the government tried to increase spending. He suggested that his abilities would be taken away.
Millay and his economic team hope that putting that money back into Argentina's banking system will not only brighten the dollar sign but also give people the confidence to make long-delayed big purchases. There is.
Sebastián Dominguez, a Buenos Aires tax expert, said in early September that the foreign currency amnesty would be a “very important way for people to buy cars, renovate their homes, and start generating profits from the dollars that are locked up in safe deposit boxes today.” “It's a low-cost opportunity.” ”
Foreign affairs took skeptical On Monday, he reviewed the current status of Millais' reforms and said they had not made much progress towards keeping his dollarization promise. The magazine said his instructions to use national monetary reserves to buy dollars (lowering prices and closing nearly 100 percent of the difference between the official and black market value of the U.S. currency) led investors to “pay down Argentina's national debt.” He claimed that it was causing concerns about his abilities.
Additionally, Milay had hoped to attract foreign investment with his tax amnesty plan, but that did not happen on a large scale. With midterm elections approaching next year, Foreign affairs Milley said she hopes Donald Trump will return to the White House and pressure the International Monetary Fund (IMF) to commit to more funding for Argentina, as Trump did in 2018. suggested.
“Even if Mr. Millay manages to win several seats in Argentina's next midterm elections, it will only be the first step towards achieving his goal. will also cost the Argentine economy,” the article concludes gloomily.
Meanwhile, Bloomberg News noticed Wednesday's announcement showed Argentina's economy grew much faster than expected in July, posting 1.7% growth instead of the 0.6% expected by economists.
“South America's second-largest economy is showing early signs of recovery, with wage growth slightly above inflation in June for the third month in a row, and consumer spending and manufacturing rising in recent months,” Bloomberg said. It shows.''
Perhaps the ultimate example of mixed news for Mr. Millais is that his policies have reduced inflation to about 4 percent, an achievement once thought impossible. But his approval ratings have fallen because Argentines are now more worried about unemployment than inflation. Now that Millay's supporters are no longer stuffing their mattresses with money, priorities have clearly shifted.
