MercoPress. South Atlantic News Agency

Argentina dollar markets waiting for implementation of the ‘whitewashing bill’

Lawmaker Feletti: the key objective of the tax amnesty is to foster investment

The US dollar in Argentina’s parallel or ‘blue market’ finished on Friday the month of May down 6.4% from the 9.40 Pesos at the end of April, including a slight drop in the last day of trading, that took it to 8.75 Pesos and 8.80 Pesos, buying and selling price.

On May 8 the ‘blue’ dollar reached the record of 10.45 Pesos, which means the rate was down 15.8% in May from that peak.

The official price of the greenback meantime ended unchanged at exchange offices at a selling price of 5.29 Pesos. This means a monthly increase of 1.8% which is the highest since Mach 2009 when it jumped 4.2%.

The considerable drop in the parallel market contrary to forecast, can be attributed to the strong campaign by the government of President Cristina Fernandez, particularly in anticipation of the ‘tax amnesty’ bill or ‘whitewashing bill’ that is expected to become effective next week following Congressional approval.

The bill invites residents with domestic or overseas assets in dollars to make the funds ‘legitimate’, no questions asked, no levies charged, as long as they purchase special financial instruments that will yield 4% interest.

Furthermore the government issued bonds to soak Pesos from the market and state companies and banks supplied the ‘blue’ market with sufficient greenbacks to turn back the rising tide.

Supply from exporters at Argentine harvest time was not abundant: during the last week of May, oilseed and grains sales overseas totalled sales of 740 million dollars, which was 5.65% less than the previous week.

But expectations have grown since the Lower House, after a twelve-hour heated and acrimonious debate passed the tax amnesty bill which means the Economy ministry can now issue the Argentine Bond for Economic Development (BAADE) and the Saving Promissory Note for Economic Development in dollars.

Such funds will be exclusively destined to the financing of public investment projects in the areas of infrastructure and energy. The move involves as well the creation of the Real Estate Investment Deposit (CEDIN), issued also in the US currency and earmarked for the buying, remodelling or building of houses.

Opposition lawmakers insist that the bill virtually grants ‘impunity’ for the commitment of “too serious money laundering crimes”.

“It is a dangerous law”, head of the Radical Party caucus at the Lower House Ricardo Gil Lavedra warned. But ruling Victory Front lawmakers responded to the criticism: “How do you plan to finance the country?”

Kirchnerite MPs hit back with the head of the Lower House Budget Committee Roberto Feletti assuring the “key objective” of the so called whitewash move is to foster “investment” on local assets “the government has protected preventing the devaluation” of Argentina’s peso currency.

Feletti added that tax amnesty does not suspend anti-money laundering rules. “(When non-declared money) access the formal banking system, financial institutions in Argentina have the obligation” to “comprehensively” abide by money laundering legislation.

Taxpayers deciding to access the local financial circuit will have a 3-month period once the law is promulgated and published in the official gazette.