Every time Alfonso Formoso needs to fill his tank, he goes abroad, driving the 30 kilometres separating his Uruguayan home in Salto from Concordia in Entre Ríos Province. On the way he visits a supermarket and grabs a bite. His pocket is grateful, but the Uruguayan economy less so.
Drawn by the constant devaluation of the Argentine peso, Uruguayans daily cross in the tens of thousands the three bridges along the more than 800 kilometres of river separating the two countries. They’re primarily taking advantage of goods and services being so much cheaper on the west bank of the River Uruguay.
“Sometimes it’s twice a week. Only yesterday I went over with a pal,” Formoso, 23, said while sat in a restaurant in Concordia.
“We don’t even bother looking at the prices,” confessed the university student.
Diego Labeque Drewanz, Argentine co-ordinator of the Centro de Frontera Concordia-Salto, highlights that the increased human flow across the river has caused car tailbacks six kilometres long at some points.
“We’ve had daily peaks of up to 14,000 people,” he says, with a daily average of 8,800 so far this year.
The phenomenon intensified after last month’s PASO primaries, which was immediately followed by a 20 percent devaluation in the wake of heavy pressures on the dollar obliging Argentina’s Central Bank to use its scant reserves to defend the exchange rate.
Unlike in Uruguay, in Argentina access to currency markets is restricted. The devaluation widens the gap between the official exchange rate and the dollar as traded on black markets, a key reference for fixing prices.
With this surge in the parallel dollar, the price differences between Salto and Concordia “would be over 200 percent on average” and in some cases “300-plus percent,” Gimena Abreu of the Economic Observatory of the Catholic University of Uruguay (UCU, in its Spanish acronym) explained in an interview.
The most recent UCU survey in July showed Salto to be 126 percent more expensive, way above the 42 percent of the July of 2015, when this comparative indicator began.
Some Uruguayans have even moved to Argentina, where their salaries go further.
“The difference is abysmal!” exclaims Carlos Garcilar, 65 a car mechanic on the point of retirement. He rents an apartment in Concordia for a fifth of what he would pay in Salto.
Security guard Maikol Horvat, 39, is looking for a house to move with all his family to Villa Zorraquín on the Argentine side of the binational bridge.
“I’ll keep working in Salto and cross over the bridge,” he tells AFP.
In Concordia he can fill his tank for less than half the price in Salto, later buying an assortment of goods at a supermarket. In Uruguay for the same money “we could maybe buy two or three items,” he assures.
According to Adrián Lampazzi, the president of the Concordia Commercial Centre, the inflow of Uruguayans “does not compensate for the crisis on this side” in a city which also has the sad record of being the poorest in Argentina.
“It helps us to survive, it always makes a difference for somebody but it is not something massive but rather very specific,” he points out.
At M&W hairdressers, Ezequiel Rubin attends many Uruguayan ladies.
“They are carefree spenders who leave good tips. It does us good,” he says.
In Salto they feel the economic punch. The department registers one of the highest unemployment rates in Uruguay (12.8 percent), according to the official figures.
“We’ve had to fire staff and we have people on the dole,” affirms María del Carmen Villar, the owner of Pasteur drugstore.
Pharmacy articles, especially medicine, are among the most affected by the price difference with Argentina.
Rodolfo Germano, the manager of Parada 19 service station, also deplores the slump in sales, even with the fuel tax cuts in Uruguay.
“There is contraband with every product, including fuel,” he denounces.
Last month over 100,000 people travelled from Uruguay to Argentina during a long weekend, representing three percent of the Uruguayan population.
Vera Facchin, president of the Salto commercial centre and the Uruguayan Business Confederation, warns that Uruguayans will end up spending around US$1 billion this year, equivalent to one percent of Gross Domestic Product, according to the Centro de Estudios para el Desarrollo think tank.
“This is a problem which would seem restricted to the river frontier zones but which has escalated to a national level,” it emphasises.
Germano sounds the alert: “It’s like when the tide goes out before tsunami. We enjoy picking up the seashells previously covered by the ocean but then the wave comes and sweeps everything away.”
by Alina Dieste, AFP