Latest news with #INDEC
DW
15-06-2025
- Business
- DW
Milei urges Argentines to bank 'mattress dollars' – DW – 06/15/2025
Argentina's libertarian President Javier Milei has his sights set on an estimated $271 billion in cash stashed away by his fellow citizens to survive economic hardships. Thanks to sweeping spending cuts, Argentine President Javier Milei has managed to bring inflation in his country down from a monthly 25% in December 2023 to below 3% now, according to official data published by the country's INDEC statistics agency. And yet, the cost of living in Argentina is still rising, forcing the libertarian leader to make another controversial proposal to the public. He's called on his fellow citizens to spend their cash dollars squirreled away in mattresses and foreign bank accounts, long held by Argentines as a hedge against decades of economic turmoil. Last week (June 5), Milei's government sent a bill called Fiscal Presumption of Innocence to Congress, declaring that the law ensures that there will be no more persecution of those Argentines holding undeclared dollars. The measure widens a tax amnesty scheme rolled out last year which already lured tens of billions of dollars back into circulation. Milei's sweeping austerity measures have reined in inflation, but left many Argentines facing economic hardships Image: DW During Milei's 2023 presidential election campaign, his supporters marched through the streets of Buenos Aires waving oversized dollar bills featuring their candidate's face. Milei himself called the Argentine peso "worth as much as shit," initially pledging to replace it with the US dollar as legal tender once he's elected. Today, Milei's dollarization drive is back on the agenda, but in a different form. This time, it's not about switching the national currency, but about integrating the US dollars Argentines have been stockpiling at home into the formal economy. Dollars 'under the mattress' The INDEC agency has estimated that Argentinians have about $271 billion (€234 billion) hidden away, money that is colloquially referred to as "dolares del colchon," or mattress dollars. The exact amount is unknown, because the money is essentially undeclared. People began stockpiling these dollars during Argentina's prolonged periods of hyperinflation, which gripped the country until the end of 2023. Having access to US dollars in cash — or being able to receive and withdraw dollar funds — allowed people to sidestep skyrocketing peso prices by taking advantage of favorable exchange rates. In Argentina, dollar cash reserves became a kind of financial life insurance. Eugenio Mari, chief economist at the Buenos Aires-based libertarian think tank Fundacion Libertad y Progreso, finds this behavior perfectly rational. Speaking to DW, he said that for decades Argentines have tried to "protect themselves from inflation and from government overreach," meaning many used part of their income to buy dollars and kept them out of circulation. But saving in dollars also meant making consumption sacrifices and spending less overall. Cash dollars for economic recovery Now, President Milei wants to change that engrained behavior by convincing Argentines to bring the hidden dollars back into the monetary system for the benefit of the broader economy. The government argues that inflation has been tamed — at least for the time being — creating the right moment to release the hoarded cash. It's yet unclear how many Argentines are considering bringing their dollars back in circulation Image: Natacha Pisarenko/AP Photo/picture alliance But trust in a currency can be destroyed quickly, while rebuilding it takes much longer. So it's still unclear whether Argentines are willing to monetize their "mattress dollars" in sizeable amounts. In his effort, Milei is counting on deregulation and the removal of tax burdens to encourage them. Some even say the president is banking his political future on the scheme, which may come to be seen as a test of people's trust in his economic policy. So far, the plan is progressing slowly, daily newspaper Clarin wrote last week. 'Fiscal innocence' bill Technically, Argentinians are required to report any foreign currency holdings. But the law has never been fully enforced. Milei's bill guaranteeing fiscal innocence to offenders was a clever move, says economist Mari. "The removal of reporting requirements to the tax authority makes transactions easier and reduces the risk of citizens being pursued by the state, especially by tax authorities," said Mari. Since Javier Milei took office in December 2023, many economic indicators have improved. Inflation has dropped significantly, poverty is declining, the government has posted budget surpluses, and the economy is growing. Argentina sees protests swell ahead of major strike To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video According to recent World Bank forecasts, Argentina's economy is expected to grow by 5.5% this year, with another 4.5% projected for next year. However, prices for food and essential goods have soared, due largely to the rollback of state subsidies and the strengthening of the Argentine peso. Dollarization through the backdoor? Thousands of Argentines, meanwhile, are crossing borders into Chile, Paraguay, or Brazil to shop more cheaply, as the stronger peso is giving them a more favorable exchange rate. Hernan Letcher, director of the Centro de Economia Politica Argentina (CEPA) in Buenos Aires, believes Milei's aim with his dollar monetization plan is to "inject more dollars into the government's currency exchange system," which for him is "essentially a foreign exchange policy measure." As Argentines go shopping abroad, the country's central bank has reported growing capital outflows amid a stronger peso Image: Carol Smiljan/NurPhoto/picture alliance Nau Bernues, a financial expert and the CEO of Quaestus Asteriscos — a firm specializing in the financial system and investments — believes the government wants to "go even further." The plan is to make the dollar a "more transactional currency" that would allow people to "buy not only an apartment or a car, but also an appliance or even a cookie at a kiosk." "It's doing everything possible to ensure that there are more and more dollars. If that happens with constant pesos or no issuance, the exchange rate should appreciate," Bernues told the news agency Noticias Argentinas last week. He noted that Milei's economic team was "constantly proclaiming" that the dollar could fall from currently about 1,180 pesos per greenback to 1,000 pesos. But he personally is skeptical about Milei's "ambitious" plan, arguing that the dollars under the mattress are people's "insurance, perhaps their life savings," which they won't touch for anything, "except if they make it much easier to purchase land, real estate and assets that the average Argentine assigns a certain amount of protection." This article was originally written in German.
Qatar Tribune
14-06-2025
- Business
- Qatar Tribune
Argentina inflation plummets to 1.5%
Agencies Argentina's monthly inflation dropped to 1.5% in May, its lowest level in five years, a positive sign for President Javier Milei's aggressive austerity campaign aimed at reining in runaway prices. Annual inflation came in at 43.5% in May, the INDEC statistics agency reported Thursday, down from 211% at the end of 2023 but still one of the highest rates in the world. The monthly rate was down from 2.8% in April. Milei, a self-declared 'anarcho-capitalist,' came to power in December 2023, wielding a chainsaw as a symbol of his plan to restore fiscal discipline and rein in inflation. Last year, Argentina recorded its first budget surplus in a decade thanks to austerity cuts, but the collateral damage was a loss of purchasing power, jobs, and consumer spending. Milei's government hailed the May figure, which it attributed to a 'successful orthodox stabilization plan' that included a recent loosening of exchange controls. The INDEC said May monthly price rises were boosted mainly by telephone and internet costs (up 4%), restaurants and hotels (3%) and health expenses (2.7%). The lowest increase was for transport (0.4%), followed by food and non-alcoholic beverages (0.5 %). The positive numbers will do little to quell the anger of Argentines over their loss in purchasing power, with wages having remained stagnant over many months of high inflation. 'Prices are not dropping; they are rising,' Cristian Rodriguez, a 45-year-old logistics employee, told Agence France-Presse (AFP). In April, Argentina received $12 billion as the first disbursement of an International Monetary Fund (IMF) loan worth $20 billion, marking a strong vote of confidence in Milei's economic program. When the loan deal was announced, the IMF said it was built on 'the authorities' impressive early progress in stabilizing the economy, underpinned by a strong fiscal anchor, that is delivering rapid disinflation and a recovery in activity and social indicators.' Success in curbing prices is the result of an austerity program that entailed firing tens of thousands of public sector workers, halving the number of government ministries and vetoing inflation-aligned pension increases.
Reuters
10-06-2025
- Business
- Reuters
Argentina monthly inflation seen at five-year low in May
BUENOS AIRES, June 10 (Reuters) - Argentina's headline inflation likely slowed in May to its lowest monthly rate in five years, a Reuters poll of analysts showed on Tuesday. Consumer prices rose 2% last month, according to the average and median estimates of 24 local and foreign analysts, returning to an inflation level the country has not reached since the economy was paralyzed by pandemic lockdowns in the first half of 2020. Inflation has fallen significantly since President Javier Milei took office in December 2023, coming close to 2% in January and February before hitting 3.7% and 2.8% in March and April respectively. A May rate at or below 2%, if confirmed by the national statistics agency on Thursday, would be the best monthly rate of Milei's government. "Although the inflation data for March and April showed a slight acceleration compared to the previous months, in May a new trend begins to become evident", said Julian Orue, economist at Fundacion Libertad y Progreso. In mid-April, Milei's government eased Argentina's exchange rate regime, which, according to analysts, helped ensure a downward trend in inflation. "The downward trend in inflation is holding steady, despite the normal bumps that come with an economic stabilization and normalization process," said Pablo Besmedrisnik, economist and director of VDC consultancy. The analysts' projections for May inflation ranged between a minimum of 1.6% and a maximum of 2.5%. Argentina's statistics agency INDEC will release official data regarding May inflation on Thursday afternoon (1900 GMT).
Yahoo
02-04-2025
- Business
- Yahoo
Javier Milei's Free Market Reforms Are Starting To Pay Off
Argentina's poverty rate fell sharply in the second half of 2024, according to official data released this week, marking a major milestone for President Javier Milei's sweeping economic reforms. According to the country's official statistics agency, the National Institute of Statistics and Census (INDEC), the poverty rate fell to 38.1 percent between July 2024 and December 2024—down nearly 15 percentage points from the first half of the year. Household poverty also declined by 13.9 percentage points, hitting 28.6 percent. And extreme poverty was cut by more than half, falling from 18.1 percent to 8.2 percent. It's a major turnaround from the beginning of Milei's presidency. When he took office in December 2023, he inherited a poverty rate of 41.7 percent, which quickly surged to 53 percent as his administration launched a "shock therapy" program to end Argentina's economic misery. One of the biggest drivers behind the poverty decline is the sharp drop in inflation. Annual inflation, which reached 276.2 percent a year ago—one of the highest in the world—dropped to 66.9 percent last month. Monthly inflation has also dropped, from 25.5 percent in December to just 2.4 percent in March. "These figures reflect the failure of past policies, which plunged millions of Argentines into precarious conditions while promoting the idea of helping the poor, even as poverty continued to increase," Milei's office said in a statement following the release of the INDEC report. "The current administration has shown that the path of economic freedom and fiscal responsibility is the way to reduce poverty in the long term." In other words, Milei's bet on free market reforms is starting to pay off. It's worth remembering the situation he walked into. "Milei inherited a country suffering from more than 200% inflation in 2023, 40% poverty, a fiscal and quasi-fiscal deficit of 15% of GDP, a huge and growing public debt, a bankrupt central bank, and a shrinking economy," writes Ian Vásquez of the Cato Institute. In response, Milei promised a radical shift in Argentina's economic model. His government slashed government spending, eliminated price controls, devalued the peso, cut subsidies, suspended public works, and laid off thousands of government workers. The changes weren't popular, but they were necessary. And now, the numbers are catching up. The economy is growing again. Gross domestic product grew in the last two quarters. The gap between the black-market dollar and the official rate has narrowed. Rents have fallen and the housing supply has increased since rent control laws were scrapped. Meanwhile, investor interest in Argentina is beginning to return, and the International Monetary Fund (IMF) is in talks with Milei's government over a new program. The IMF projects a 5 percent growth for Argentina in 2025. Still, challenges remain. Despite the improvement, over 11 million Argentines are still living in poverty, with 2.5 million facing extreme poverty. And more than half of all children ages 14 and under in Argentina are poor. Milei has consistently said that his adjustment plan would have a "negative impact on the level of activity, employment, real wages, and the number of poor and indigent people," before it started to work. Things are finally starting to get better and at the right time. With midterm elections coming in October, Milei's party, La Libertad Avanza, has an opportunity to expand its influence. Right now, the party holds only a small share of congressional seats. But with half of the lower house and a third of the Senate up for grabs, the growing economic momentum could give Milei the support he needs to deepen and accelerate his reforms. The post Javier Milei's Free Market Reforms Are Starting To Pay Off appeared first on
Yahoo
02-04-2025
- Business
- Yahoo
Javier Milei's Free Market Reforms Are Starting To Pay Off
Argentina's poverty rate fell sharply in the second half of 2024, according to official data released this week, marking a major milestone for President Javier Milei's sweeping economic reforms. According to the country's official statistics agency, the National Institute of Statistics and Census (INDEC), the poverty rate fell to 38.1 percent between July 2024 and December 2024—down nearly 15 percentage points from the first half of the year. Household poverty also declined by 13.9 percentage points, hitting 28.6 percent. And extreme poverty was cut by more than half, falling from 18.1 percent to 8.2 percent. It's a major turnaround from the beginning of Milei's presidency. When he took office in December 2023, he inherited a poverty rate of 41.7 percent, which quickly surged to 53 percent as his administration launched a "shock therapy" program to end Argentina's economic misery. One of the biggest drivers behind the poverty decline is the sharp drop in inflation. Annual inflation, which reached 276.2 percent a year ago—one of the highest in the world—dropped to 66.9 percent last month. Monthly inflation has also dropped, from 25.5 percent in December to just 2.4 percent in March. "These figures reflect the failure of past policies, which plunged millions of Argentines into precarious conditions while promoting the idea of helping the poor, even as poverty continued to increase," Milei's office said in a statement following the release of the INDEC report. "The current administration has shown that the path of economic freedom and fiscal responsibility is the way to reduce poverty in the long term." In other words, Milei's bet on free market reforms is starting to pay off. It's worth remembering the situation he walked into. "Milei inherited a country suffering from more than 200% inflation in 2023, 40% poverty, a fiscal and quasi-fiscal deficit of 15% of GDP, a huge and growing public debt, a bankrupt central bank, and a shrinking economy," writes Ian Vásquez of the Cato Institute. In response, Milei promised a radical shift in Argentina's economic model. His government slashed government spending, eliminated price controls, devalued the peso, cut subsidies, suspended public works, and laid off thousands of government workers. The changes weren't popular, but they were necessary. And now, the numbers are catching up. The economy is growing again. Gross domestic product grew in the last two quarters. The gap between the black-market dollar and the official rate has narrowed. Rents have fallen and the housing supply has increased since rent control laws were scrapped. Meanwhile, investor interest in Argentina is beginning to return, and the International Monetary Fund (IMF) is in talks with Milei's government over a new program. The IMF projects a 5 percent growth for Argentina in 2025. Still, challenges remain. Despite the improvement, over 11 million Argentines are still living in poverty, with 2.5 million facing extreme poverty. And more than half of all children ages 14 and under in Argentina are poor. Milei has consistently said that his adjustment plan would have a "negative impact on the level of activity, employment, real wages, and the number of poor and indigent people," before it started to work. Things are finally starting to get better and at the right time. With midterm elections coming in October, Milei's party, La Libertad Avanza, has an opportunity to expand its influence. Right now, the party holds only a small share of congressional seats. But with half of the lower house and a third of the Senate up for grabs, the growing economic momentum could give Milei the support he needs to deepen and accelerate his reforms. The post Javier Milei's Free Market Reforms Are Starting To Pay Off appeared first on
