Argentina: Currency Controls

Some governments are threatened from abroad while others are not.
However, all governments will collapse when they lose the trust of their people.
The contrast is Argentina and the USA, where I found many similarities.
Once Argentina and the USA were among the top ten richest countries in the world.
Both governments practice printing money to pay off its public debts…
How will the People in both regions respond to the global financial crisis and untrustworthy governments?
Argentina is a falling domino, in the global financial system, to keep an eye on. ~Ron

  • The Argentine government began 2014 by forcing the country’s supermarkets to fix prices for 200 products. So basically, the price of milk or flour stays the same for the consumer, even if demand goes up, inflation rises, or if the supplier has to pay more for it.
  • The official statistics bureau says prices rise by about 10 percent annually. But that’s a total fabrication. In reality, inflation in Argentina runs around 25 percent a year. A basket of goods that cost $100 in January would cost $125 in December. Argentina’s blatant fudging of official data has gotten so bad that the International Monetary Fund publicly warned Buenos Aires to start telling the truth – or face expulsion.
  • Argentines have been rushing to buy U.S. dollars as a safer currency to park their money. In response, the government announced limits on the number of dollars you can buy. The result? A rampant black market. While one dollar officially buys you 6.6 Argentine pesos, you can actually get almost double that rate on the street: about 10.8 pesos. The effect is a corrupt economy, suffering businesses, and a loss of foreign investment.
  • According to Merco Press, a regional news agency, Argentina’s total bill on subsidies like energy for the first half of 2013 rose by 62 percent from the previous year. This isn’t the only form of government support. According to the World Bank, Argentina is the one of the world’s most protectionist countries – meaning that it imposes the most restrictions on global trade, shielding its favored sectors.
  • Argentina, is of course, a democracy. But President Cristina Fernández de Kirchner has displayed worrying symptoms. Between her and her late husband, the Kirchners have now ruled Argentina for a decade. In recent months, Cristina Fernández has clamped down on the media, floated rumors of amending the constitution to run for a third term. She’s building a cult of personality, fashioning herself after Evita, the populist widow of the former president Peron – made famous on stage and screen. –CNN

Argentina restricts online shopping as foreign reserves drop

22 January 2014
Individuals are allowed to buy items up to the value of $25 (£15) from abroad tax free every year. Once the $25 level is reached, online shoppers in Argentina need to pay a 50% tax on each item bought from international websites.

The government tightened the restrictions later on Wednesday limiting tax-free purchases to two a year.

One resident of Buenos Aires, who gave his name as Martin, described the tax as “crazy”.
But he told the BBC: “The real problem is that the item is received in customs now instead of at your home. Each time you go to customs, you need to spend three or four hours.
“I lose half a day’s work, which is unacceptable.”
Currency controls

Custom officials have been struggling to keep accurate records of consumers’ transactions.
The government hopes the new declarations will make it easier to enforce the import tax, says the BBC’s Ignacio de los Reyes in Buenos Aires.

New currency controls were introduced a week after Ms Fernandez was re-elected in 2011.

Among the restrictions introduced more recently was a 35% tariff on credit card transaction abroad.
Despite the government’s efforts, Argentina’s reserves are now below $30bn (£18bn) – their lowest level since 2006.

Currency controls, which were common in most countries until the mid-1980s were dropped in Argentina in 1991. Finance Minister Domingo Cavallo pegged the local currency, the peso, to the dollar.

The plan collapsed 10 years later, when the government was forced to devalue its currency.
The country eventually froze bank accounts and defaulted on its debts. It has since struggled to attract foreign loans at market rates.

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One comment on “Argentina: Currency Controls
  1. RonMamita says:

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    A documentary by Greg Grant and Linda Vigil.

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