Argentina Introduces More Obstacles on Spending Foreign CurrencyCharlie Devereux
Argentine President Cristina Fernandez de Kirchner is imposing further deterrents to prevent Argentines from spending foreign currency to rein in a drain on reserves that have fallen to a seven-year low.
Argentines must inform the tax agency by filling out an online form each time they buy a product from abroad for delivery inside the country, according to a resolution published today in the Official Gazette. In some cases, they must pay a 50 percent import tax on goods delivered by post.
Since introducing currency controls in 2011, Fernandez has steadily reduced Argentines’ access to foreign currency as she uses reserves for foreign debt payments. Reserves have tumbled an average of $1.3 billion per month in the past year, falling to $29.7 billion yesterday for the first time since 2006. The new measure is a way to discourage Argentines spooked by the idea of providing personal information to the tax office from purchasing goods abroad via the Internet, said Belen Olaiz, an economist at Buenos Aires-based research company Abeceb.com.
“This is a way of putting another obstacle in the way of people who are buying on the Internet,” Olaiz said in a telephone interview. “Introducing a requirement to fill out a form to reduce online purchases isn’t going to resolve the problem of declining reserves.”
Argentina’s 2014 budget envisages using a record $9.9 billion to pay in foreign debt payments.
Cabinet Chief Jorge Capitanich said today that the number of Argentines using the Internet for shopping abroad has “grown extraordinarily.”
The government in December raised a tax on credit card purchases abroad to 35 percent from 20 percent, increasing the implicit exchange rate on air tickets, hotels and purchases abroad to 9.2 pesos per dollar today compared with the official rate of 6.8911 pesos per dollar.
Argentina also raised taxes on purchases of luxury goods such as cars, yachts and planes as imports drag down reserves.