Monday, June 17, 2024

ECONOMY | 28-11-2021 09:08

Kulfas defends new rules: ‘Middle class has many options for the summer’

Productive Development Minister Matías Kulfas becomes the latest government minister to take to the airwaves to defend new Central Bank rules on credit card purchases in dollars.

Productive Development Minister Matías Kulfas became the latest government minister to take to the airwaves to defend new rules on purchases this Saturday.

Kulfas, 49, defended a move by the Central Bank that bans credit card operators from financing payments through installment plans if these are intended for tourism abroad, including plane tickets and car rentals. The move is part of a bid to protect vital foreign currency reserves.

"People who travel abroad are not poor, let's be clear, and the middle class has many options within the country for the summer," the minister told Radio Continental.

"Whoever wants to go abroad should, but they should pay for it," he said.

The minister justified the measure by saying that "it has to do with managing an imbalance in the balance of foreign exchange and ensuring that there is no shortage of products that Argentina needs."

He acknowledged that there are "measures that may be a little unpleasant," but said that the country’s “reserves have to be robust to sustain a consistent economic plan."

Kulfas said Argentina is in "a scenario of reactivation and we have to prioritise its continuation."

"It is clear what the priority is between mass foreign travel or underpinning production and employment," he said.

Limitations on the purchase of dollars for savings or payments for individuals are already in place, while the parallel black market or ‘blue’ dollar is almost double that of the the official (o regulated) rate.

In this context, the Central Bank decided "to establish, effective from 26 November, that financial and non-financial institutions issuing credit cards should not finance in installments the purchases made by credit cards of their customers (...) of tickets abroad and other tourist services abroad (such as accommodation, car rental, etc)."

The measure, announced on Thursday in a communication to financial and non-financial credit card issuers, was published on the Central Bank's website.

The decision, taken as the summer holiday period looms, comes on top of the existing restrictions on dollar purchases. Argentina’s government is seeking to renegotiate a US$44-billion debt with the International Monetary Fund (IMF) and extend payment deadlines to avoid default, with almost US$20 billion due to be repaid in both 2022 and 2023.

Argentina's economy is slowly emerging from the recession into which it plunged in 2018, with growth expected to be 8.3 percent this year, after a 9.9 percent collapse in 2020 due to the coronavirus pandemic.

The country’s runaway inflation rate is 52.1 percent over the last 12 months. Prices have already increased 41.8 percent in the first 10 months of the year, according to official data.



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