Economy Minister Luis Caputo has confirmed that Argentina’s government is working on a series of deregulatory measures to make it easier for citizens to spend dollars domestically — without having to explain the origin of the funds.
“What we’re going to do is encourage people to be more inclined to take their dollars out from under the mattress, from safety deposit boxes, or wherever they may be, and spend them,” said President Javier Milei’s top economic chief.
Calling for a “cultural shift” in the way people spend their undeclared cash, Caputo said that Argentines shouldn’t have to explain away what they spend.
He stressed that Argentina’s economy needs to be remonetised and that “the most logical way is for that to happen in dollars.”
“I don’t buy the story that people don’t spend their dollars” because they don’t want to, the minister said, arguing that they didn’t do so due to fear of the authorities.
His comments come just weeks after the Milei government made dramatic modifications to Argentina’s foreign exchange regime — a move that has already yielded results. Private- sector dollar deposits rose by more than US$1 billion between mid-April and April 25, after falling by US$2.5 billion in the first few months of the year, according to Central Bank data.
The rebound in dollar holdings coincided with the removal of capital controls for individuals, the introduction of an official exchange rate band between 1,000 and 1,400 pesos to the US dollar and a new disbursement of US$12 billion from the International Monetary Fund.
IMF Managing Director Kristalina Georgieva recently highlighted the scale of Argentina’s informal dollar holdings, claiming that citizens keep more than US$200 billion “under the mattress and God knows where.”
Milei and Caputo want to coax those funds into the formal economy.
Trailing measures without providing detail, Caputo hinted that steps would be taken by Argentina’s Central Bank, the Economy Ministry and the ARCA tax bureau to facilitate the circulation of greenbacks into the domestic economy.
Caputo said that if Argentina is to be “a normal country, nobody should ask you to explain how you spend your money.”
He went on: “The aim is not having to explain what you spend your money on — even if it wasn’t in the banking system. It’s a cultural shift that needs to be properly explained.”
The minister said a package of incentives would be announced in the coming weeks to encourage use of dollars in everyday transactions and within the financial system. Among the proposals under consideration are tax benefits for dollar payments, a reduction in tax on financial transactions, incentives for agro-exporters to sell outside the official FX market and expanded use of QR codes and debit cards for dollar payments.
Asked whether the government's recent reduction in export duties for the agricultural sector would be made permanent, Caputo avoided giving a clear answer, stating: “If macroeconomic conditions allow it, there are always chances to lower export taxes.”
He explained that the temporary reduction had been introduced due to fears of a drought which ultimately did not happen while prices initially fell but later recovered.
– TIMES/NA/PERFIL
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