Milei unveils plan to draw dollars out from under mattresses

President Javier Milei’s government on Thursday announced a raft of measures to encourage citizens to bank the billions of dollars they have stashed under mattresses and floorboards, as well as in safety deposit boxes and offshore accounts.

Launching the plan under the slogan "Your dollars, your decision," Presidential Spokesperson Manuel Adorni declared: "It's a new regime that will allow Argentines to freely use their savings, without having to prove where they came from."

For too long, saving in Argentina has been “criminalised,” Adorni said. The scheme will put an end to Argentina’s “absurd controls” and will be coupled with a bill that will “shield” those who utilise the scheme and ensure they avoid “persecution” from the tax authorities, he added.

Over years of high inflation and currency controls, Argentines traded their battered pesos for dollars, which they often hoarded at home, in cash. 

As part of a plan to buttress the peso by increasing the amount of dollars in circulation, Milei now wants citizens to spend or deposit their cherished greenbacks and undeclared foreign currency.

The measures do not impose deadlines or penalties for those who formalise undeclared money, while eliminating the obligation to explain the origin of the funds.

Milei’s government has formally christened his scheme “Plan de Reparación Histórica de los Ahorros de los Argentinos” (“Historical Reparation Plan for Argentines' Savings”)

Last year, a tax amnesty brought in billions of dollars in deposits and in April, Argentina received a first tranche of US$12 billion from a new US$20-billion loan agreed by the International Monetary Fund (IMF).

The plan announced Thursday, which will be formalised in a decree and a bill, according to Adorni, builds on the 2024 amnesty.

The new rules will kick in on June 1, said the spokesperson.

Banks will be required to accept fixed-term deposits of up to 100 million pesos (about US$90,000) without asking about the provenance of the funds – a rise more than tenfold on the current limit.

Meanwhile, the threshold for transactions that banks must report to tax authorities will also be raised more than tenfold.

Personal expenses paid with credit or debit cards, or digital wallets, will no longer be reported to the tax authorities, with no limit on the amount according to the original announcement although a new floor of 30 million pesos to 50 million pesos was set when the details were revealed.

Adorni said such “ridiculous practices” had to stop, complaining: “The state obliges banks to report all cash withdrawals made and businesses to report purchases of any kind.”

He said that the UIF money-laundering watchdog received reports of “so many allegedly suspicious operations” that the body “only had enough resources to audit 0.34 percent of them.”

The plan is not a new “blanqueo” (“whitewash”) but a wider shift that gives people “the freedom to manage their savings,” assured Economy Minister Luis Caputo at a press conference on Thursday.

The state has to once again “trust the people” and “stop treating people like criminals by default,” said the government.

According to government estimates, for every peso registered in the Argentine economy there are five in the informal economy, a state of affairs Caputo attributed to “excessive controls, taxes and regulations.”

Caputo became angry during Thursday’s press conference when a journalist asked if he had undeclared money stashed in his own mattress.

Visibly annoyed, the minister asked the “disrespectful” reporter to correct himself, before responding to a reformulated question about declared funds stored overseas and whether officials would also benefit from the new regime.

“Keeping dollars abroad is permitted. It's not the same as keeping them under your mattress, which means not declaring them,” said Caputo.

And he added: “We promote freedom. Whoever wants to keep them outside can have them. Whoever wants to bring them inside [the country] can bring them in. But it has nothing to do with the measure announced today.”

According to his last affidavit filed with the government, at the end of 2023, Caputo has deposits totalling some US$2.9 million outside Argentina.

The official has not yet presented a filing for last year.

 

Money-laundering fears

Adorni denied that the no-questions-asked approach would allow gangs to launder the proceeds of criminal activities.

Those who keep undeclared funds "are not criminals, they are the vast majority of Argentines who have been abused by excessive taxes and controls," the government said.

“Your dollars, your decision, what is yours is yours and you can do whatever you want with that money,” declared Adorni.

“Argentines are innocent again until [the] ARCA [tax bureau] proves otherwise,” he added.

Speaking in Washington, IMF spokeswoman Julie Kozack said the lender, of which Argentina is the largest debtor, would "closely monitor" the money-laundering question.

Argentina’s “authorities are committed to strengthening financial transparency and aligning the anti-money laundering framework with international standards,” said Kozack at a press conference in Washington.

“Any new measures, including those that may be designed to encourage the use of undeclared assets, should be consistent with these important commitments,” she warned.

Milei came to power in December 2023 vowing to fix Argentina's perennially crisis-hit economy by slashing public spending and through deregulation.

Last year, Argentina recorded its first budget surplus in a decade but purchasing power, employment and consumer spending have fallen.

 

 

Details of the new rules

The government will repeal most tax information regimes to simplify the revenue collection system and encourage people to use their dollars under the mattress. 

The main measures:

– The repeal of the information regimes obliging shops and professions to inform ARCA tax bureau about the operations of citizens.
– Repeal the CITI report by notaries.
– The régime to inform on the purchase and sale of second-hand vehicles will also cease to form part of the reports for ARCA.
– The régime requiring information on the payment of apartment expenses will also be repealed. 
– The real estate transaction code: as from now the seller of a property or the real estate agent will not have to report to ARCA when putting a property up for sale.
– The régime for relevant electricity, water and gas consumption and telephone use. As from now the providers of public services will not have to report such consumption to ARCA.
– The banks will cease to inform ARCA as to bank transfers and credit for sums under 50 million pesos for physical persons and 30 million for corporate persons.

Information on cash withdrawals of any sum:

– As from now, in line with international standards, the limit will be 10 million pesos for physical and corporate persons.
– The limits on bank balances for the last working day of the month were between 700,000 and one million pesos and will now be raised to 50 million for physical persons and 30 million for corporate persons.
– Information on transfers and credit in digital wallets previously had a floor of two million pesos which is now raised to 50 million for physical persons and 30 million for corporate.
– This régime will include all taxpayers except those categorised as major taxpayers and corporate persons.

 

– TIMES/AFP/NA