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Argentina is making it harder for people to buy U.S. dollars to pay for travel abroad.
A new rule published Monday says anyone wanting to buy dollars for travel must first prove their money was obtained legally, and provide the tax agency with trip details including why, when and where they are traveling.
Many Argentines only declare part of their wealth and income to evade taxes, and use black-market currency exchanges to convert their inflationary pesos into dollars. Travel agencies are the latest target since they manage multiple currencies and offer customers black-market rates for their money.
President Cristina Fernandez is cracking down to keep hard currency from flowing out of Argentina, which needs the dollars to maintain its central bank reserves and pay debts.
Latin America’s political shift to the Left is starting to have serious consequences as far as mining companies are concerned. In April the Argentine government renationalised the oil company YPF, and early last week introduced a new law aimed at reducing mining companies’ imports into Argentina.
Last year foreign investment in Argentina’s mining sector almost reached a new record of $3 billion, but this new law calls into question future investment. This new decree means that the government will start to control all imports by mining companies, in an effort to boost Argentina's foreign currency reserves and its trade surplus.
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I could cry for Argentina. Can you imagine that this country was one of the richest on earth just 100 years ago? So sad.
BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
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The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.
Argentina just made it more expensive for its people to use credit cards outside the country, and more dangerous for cardholders who aren't paying all the taxes they should.
One measure published in Friday's official bulletin adds a 15 percent tax every time people make a purchase outside the country using a card issued by an Argentine bank. Another requires the banks to report every credit card purchase, home or abroad, to the tax agency.
The moves target Argentines who have discovered that by using credit cards outside the country, they can get around increasingly tight currency controls and shelter their money from soaring inflation. Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $289 million out of the country in just one month. Overall capital flight soared to $23 billion in 2011.
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Quote :
BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.
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The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.
Thousands of Argentines marched Thursday night in the largest protests yet against the government of President Cristina Fernandez, who has lost popularity since her landslide re-election last year due to corruption scandals, violent crime and her ever-tightening controls over the economy.
“Cristina, the vote doesn’t provide impunity for moral frauds or wiping out the economy,” read a huge red sign that a group of young protesters carried into the Plaza de Mayo, in front of the Government Palace.
The pot-banging protests known as “cacerolazos” are an Argentine tradition, and this one appeared to be organized by everyday citizens on social networks without the support of opposition parties. In numbers bigger than any protests seen since Fernandez took office in 2007, people marched on public plazas in the capital and other major cities around Argentina.
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Crime, inflation and currency controls were the main worries of people who surveyed last month by Management & Fit consulting firm, which found 72 percent disapprove of her management of the economy, and 58 percent disapprove of her performance overall. The survey of 2,259 people nationwide, which had a margin of error of 2.2 percentage points, found that nearly 70 percent also disapprove of her political opponents’ performance.
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Moody's Investors Service has changed the rating outlook on Argentina to negative from stable, citing haphazard economic policy decisions coupled with increasing questions about the reliability of official statistics.
Moody's said it could cut the country's ratings into the Caa category if policy decisions hurt the main economic and debt metrics.
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Argentine President Cristina Fernandez de Kirchner’s foreign-exchange controls are driving pesos underground.
A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.
The migration of cash out of the financial system is stripping banks of funding and undermining Fernandez’s efforts to hold down interest rates and bolster an economic rebound. The 30-day deposit rate has jumped 1.8 percentage points in the past four months to 14.8125 percent. A three-day decline of 0.8 percentage point that pared the increase in the benchmark rate will prove short-lived as annual inflation of 24 percent drives more Argentines to move money into the underground economy, said Eric Ritondale, an economist at Econviews.
“Money’s moving out of the banking system and out of the formal economy,” Ritondale said in a telephone interview from Buenos Aires. “As much as the government wants to promote the use of pesos, the truth is they won’t be able to achieve it. You can’t get it done” with interest rates below inflation.
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... Today, in a futile attempt to halt inflation, the government of Cristina Kirchner announced a two-month price freeze on supermarket products. The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported. As AP reports, "The commerce ministry wants consumers to keep receipts and complain to a hotline about any price hikes they see before April 1."
Perhaps they will. What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today's prices, before the country's inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting's good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken by Argentina's female ruler.
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So to summarize: first capital controls, then a currency crisis, then expectations of sovereign default, then a rise in military tensions, and finally - price controls, after which all out chaos usually follows.
Study this sequence well: it is coming to every "developed" country near you in the months and years ahead.
But, as with every other hyperinflationary implosion, there is a silver lining: the stock market is soaring...
in the latest stunner of a government decree (which like Venezuela yesterday is merely a harbinger of what is coming everywhere else), has banned advertising in the Argentina's newspapers in an attempt to weaken what's left of a private, independent media, and to punish those who don't comply with the government's propaganda.
http://www.reuters.com/article/2013/03/12/us-falklands-referendum-idUSBRE92B02T20130312Residents of the Falkland Islands voted almost unanimously to stay under British rule in a referendum aimed at winning global sympathy as Argentina intensifies its sovereignty claim.
The official count on Monday showed 99.8 percent of islanders voted in favor of remaining a British Overseas Territory in the two-day poll, which was rejected by Argentina as a meaningless publicity stunt. There only three "no" votes out of about 1,500 cast.
http://www.reuters.com/article/2013/03/12/us-falklands-referendum-idUSBRE92B02T20130312
99.8% ??? That's hard to believe...
The streets of Buenos Aires are full of revolting Argentinians this evening as they protest President Cristina Fernandez de Kirchner's (CFdK) plans to 'increase' state control of the court system. CFdK's proposal looks to limit the judicial system's ability to bring actions against the state, as Bloomberg reports, leaving citizens and companies unprotected against state actions affecting their finance or assets (i.e. mass nationalization or confiscation). ...
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