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Argentina’s libertarian President Javier Milei will scrap reporting rules that allowed tax authorities to minutely track people’s spending, aiming to mobilise billions of dollars of hidden savings to boost spending and dollarise the economy.
Argentina’s tax authority will no longer require businesses, including credit card providers and banks, to report all customers’ purchases and will dramatically cut the information taxpayers must give in annual returns, officials told reporters on Thursday.
The measures aim to push Argentines to spend an estimated $271bn in dollar savings that they have stashed outside their formal system as a hedge against the country’s volatile peso, strict currency controls and erratic tax policy.
Economy minister Luis Caputo said those dollars were needed to “remonetise” the economy after Milei’s tight monetary policy restricted the supply of pesos in circulation to fight inflation.
“When you have a healthy economy, it starts to want more money supply,” he said. “We need there to be more money in the economy, but that doesn’t have to be pesos . . . This process of remonetisation can take place in dollars.”
Milei — who campaigned on a pledge to dollarise the economy but was hamstrung by the lack of dollars in Argentina’s central bank — is now championing an “endogenous dollarisation”, in which greenbacks gradually displace pesos.
“If individuals use the dollars under the mattress . . . at some point there will be so many dollars compared to the number of pesos that if we want we can shut down the central bank,” Milei told an event last week. “And liberate ourselves from thieving politicians for eternity.”
Milei changed rules earlier this year to allow businesses to accept payments in dollars and other foreign currencies, but these accounted for just 0.3 per cent of total transactions in March, according to central bank data.
Lucio Garay Méndez, macroeconomic analyst at local consultancy EcoGo, said it was “impossible” to know how many dollars the new measures would unlock.
But extra dollar purchases of cars, homes and appliances could help revitalise economic activity that has stagnated in recent months after recovering from last year’s recession, he added.
Activity rose 5.6 per cent in March year on year but fell 1.8 per cent from February, the first contraction in ten months.
“The government is facing a trade-off as it tries to cool down the economy to bring prices down as much as possible, but at the same time wants the level of activity to keep rising,” Garay Méndez said. “That’s where these dollars could come in.”
