According to official data published by the country’s Indec Statistical Agency, Argentina President Xavier Mili has managed to bring down inflation in his country up to 25% monthly in his country.
And yet, the cost of living in Argentina is still increasing, forcing the liberal leader to make another controversial resolution for the public.
He asked his fellow citizens to spend their cash dollars, which had gone away in mattresses and foreign bank accounts, which had long been organized by Argentina as a hedge against the decades of economic turmoil.
Last week (June 5), the Mili government sent a bill called the fiscal estimation of innocence to the Congress, announceing that the law ensures that those Argentina would have no connection with capturing and earning dollars.
The remedy widen a tax amnesty scheme last year, already a lure of tens of billion billion billion.
During the 2023 presidential election campaign of Milli, his supporters marched by waving the dollar bills featuring their candidate’s face through the streets of Buenos Aires. Milei Himelf called Argentina Peso “value as the same dirt”, “pledged to replace it as a legal tender with the US dollar after it was selected.
Today, Miley’s dollar is back to the drive agenda, but in a different form. This time, it is not about switching the national currency, but the Argentina has been at home in the formal economy about integrating the US dollar.
Dollar ‘under the mattress’
The IndEC agency has estimated that Argentina has about 271 billion dollars (€ 234 billion), which is said in colloquial language, which is “called”Dolarus del colchon“Or a mattress dollar. The exact amount is unknown, as money is necessary.
People began to stock the thesis during Argentina’s prolonged hyperflination, which caught the country by the end of 2023. Reaching in cash to US dollars – or being able to obtain and withdraw dollars funds – allowed people to side points by taking advantage of favorable exchange rates.
In Argentina, the dollar cash reserve became a kind of financial life insurance.
Eugenio Mari, Buenos Aires-based Liberterian Think Tank Fundsian Liberd, the chief economist of Y Progresso, finds this beavar completely rational.
Speaking to DW, he said that for decades Argentina has “tried to protect more and more from inflation and government,” means that several parts of their income were used to buy dollars and were kept out of circulation.
But savings in dollars meant to sacrifice consumption and spend lower in overall.
Cash dollar for economic recovery
Now, President Miley wants to change the attached behavior by assuring Argentina to bring back the hidden dollars to the monetary system for the benefit of the wider economy.
The government argues that inflation has been named – at least for the time of fact – making the right moment to release hoarded cash.
But confidence in a posture can be destroyed quickly, while reconstruction takes longer. So it is still not clear whether Argentina is ready to mudge its “mattress dollars” in large quantities.
In his effort, Milli is confident in deregulation and removing tax burden to encourage them. Some people also say that the President is banking his political future on this plan, which can be seen as a examination of the people in their economic policy.
So far, the plan is slowly moving forward, daily newspapers Clarin Wrote last week.
‘Fiscal innocence’ bill
Technically, people from Argentina need to report any foreign exchange holdings. But the law has never been fully implemented.
Economist Mari says that Miley’s bill was a clever step for fiscal innocence for guarantees.
Mari said, “The removal of reporting requirements to the tax authority makes the transaction easier and reduces the risk of citizens by the state who do uniquely by tax authorities.”
In December 2023, Xavier Mili took over, many economics indicators have improved. Inflation has declined significantly, poverty is declining, the government has posted budget surplus, and the economy is increasing.
For recent World Bank forecasts, Argentina’s economy is expected to increase by 5.5% this year, an estimated 4.5% for next year.
However, prices have increased for food and essential commodities, which are largely due to increasing the level of rollbacks and Argentina pesos of state subsidy.
Dollar through the back door?
Meanwhile, thousands of Argentina, Chile, Paraguay, or Brazil are crossing the boundaries to do more cheaply, as strong pesos are giving them a more favorable exchange rate.
Herns Lateter, Director of Centro de Economia Politica Argentina (CEPA) in Buenos Aires, believes that Milli aims to “inject more dollars in the government’s curriculum exchange system measurement.”
NAU Bernues, a financial expert and CEO of Quaestus Asteriscos – a firm with a financial system and a firm specialized in investment – believes the government “wants to go further.” The plan is to make the dollar “more transaction currency” that will allow people not only to buy an apartment or car, but also to buy equipment or even a cookie on a kiosk. “
Bernuz told the news agency notesians Argentina last week, “Every effort to ensure that there are more and more dollars. If this happens with a continuous peso or any issuance, the exchange rate should be appreciated,” Burnus told the news agency notes for the news agency noticerus Argentina last week.
He said that Miley’s economic team “announced continuously” that the dollar could currently fall from about 1.180 peso per greenback to 1,000 pesos.
But he is personally doubting Miley’s “Ambitios” plan, arguing that the dollar under the mattress “insurance, perhaps their life savings,” which they are touching for anyone, “except that they make it easier to purchase and property. Average Argentina provides a certain amount.”
This article was original in German.
