Domingo Cavallo’s Radical Plan to Ease Access to Tourism Dollars: “It’s Completely Different”

Ex-Minister Suggests Different Foreign Exchange Access Scheme Due to Central Bank’s Shortage of Reserves

October 8, 202203:53

Former Minister of Economy Sunday horse This Friday suggested the government move forward “A completely different courseAs a coping strategy Increasing depreciation of the peso. He also suggested that it might work Access to dollars for tourism or travel abroad and avoid loss of reserves.

in statements LN+The economist explained that the initiative should be implemented within the framework of the partial dollarization scheme, although, according to him, this does not imply the abolition of exchange controls. However, he explained that it would be a progressive plan that would allow capital to return to the country.

“We should allow the dollar to be used as currency again.Cavallo emphasized. “It doesn’t mean changing all pesos to dollars, because obviously the central bank can’t afford it, but it does.” which can function as a currency in any way. That you can save legally and that there is protection in dollars for that saving as well,” he explained.

A former minister, who carried out the conversion in the 1990s, claimed the initiative would “implement” the government. A completely different exchange rate regime than today“which, in any case, will have current limitations Which forces exporters to sell in the official market and importers to earn foreign exchange there.

Cavallo suggested this All transactions “except for exports and imports” can be made “between natural persons in a completely free foreign exchange market“. And added: “Only in this way is it possible to re-enter the Argentine capital that is abroad”.

The former minister noted that the results of this program will not be immediate, but noted that “once people get used to the fact that the dollar also works as a currency,” the country’s outlook will change.

In this regard, he clarified that this private market will be beneficial for the dollars needed for tourism and which often causes strong controversy in the government trying to preserve the weak reserves. “It makes no sense for the central bank to sell foreign currency for travel and tourism“- he said.

In the absence of dollars, Inclusion of the parallel market It will be completely free for “those who want to travel or spend time abroad” and also for those who want to save in foreign currency.

Who will give this dollar? “The same Argentines who have a lot of foreign currency abroad and who are willing to sell it on the Argentine market at a certain price.Cavallo replied.

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Faced with the need to increase reserves, the government has on various occasions noted against international travel and spending abroad. In fact, various measures have recently been taken to prevent travel and purchases outside the country.

AFIP The tourism dollar rose in July, with the perception of taxes on profits and personal property rising from 35% to 45%.. The event drew a strong reaction from the union of travel agencies, which complained about the constant changes in the rules.

This was not the first measure to try to stem the outflow of foreign currency from the central bank. Country tax application; profit in advance; and Cancellation of travel quotas abroad There were several measures with credit cards that were previously implemented during the Front administration.

In July, the then short-lived Minister of Economy, Silvina Batakisinvented a phrase that caused a strong controversy and is still remembered today: “The right to travel collides with the generation of jobs“. The statement came to life this week when the current head of Banco Nación was seen in the courtyard of an Apple store in the United States.

Although the government has long targeted tourism, various entities are challenging this vision. for the occasion Argentina Forum of Business Travel Consultants (Facve) said in July that Tourist report In a central bank deficit, this is insignificant, because there all foreign currency card transactions are treated as online purchases. According to the subject, tourism itself – that is, tickets, stays and others – represents only The fourth part.

According to the latest Central Bank report, the net outflow of “Trips, tickets and other card paymentsIt was in August 758 million dollars.