On Tuesday, the same day that the US dollar stood at 10 pesos on Argentina’s illegal exchange market — nearly twice the official rate — the government of Cristina Fernández de Kirchner announced a fiscal amnesty for all undeclared dollars. The deputy economy minister, Axel Kicillof, said that Argentina is in “a comfortable situation in terms of dollar availability” and that this initiative “seeks to attract the dollars [...] back into the productive economy.”
Anyone wishing to come clean with their undeclared money will have to buy two new government bonds, one to fund YPF’s investments and other infrastructure work, and another one to breathe new life into the real estate market, which generally operates in US currency and has been in a slump since October 2011, when Argentinean authorities imposed severe restrictions on the purchase of dollars.
“Fifty years of recurring devaluations led to a lack of confidence in our currency,” explained Kicillof. “On average, every Argentinean in the country has around $1,200 [in cash].”
The high inflation rate had led to expectations of a peso devaluation in 2011, but the government restricted the purchase of dollars instead. Since then, the illegal market has boomed.
Official figures place inflation at 10 percent. External estimates say it is closer to 23 percent. Banks are offering 14-percent interest to customers who put their pesos in a current account. But there are many who trust more in the solidity of the dollar. Last June Fernández launched a campaign to “pesofy” the economy and even changed three million dollars of her own money into the national currency.