BUENOS AIRES: Argentina has dismantled capital and trade restrictions that have long hindered investment in energy projects and other sectors of the commodities-driven economy.
The move effectively devalues the Argentinian currency.
“Whoever wants to export can do so without asking for permission, whoever wants to import can do so, whoever wants to buy dollars can buy them, whoever wants to sell them will be able to do so,” new finance minister Alfonso Prat-Gay said last night of the widely anticipated policy shift that takes effect today.
In a move that is particularly significant for the energy sector, companies will once again be able to repatriate profits.
The changes will impact all areas of Argentina´s anemic economy, marking the most significant market-oriented turn for president Mauricio Macri, who was sworn into office on 10 December.
Prat-Gay described the blue-chip exchange rate of 14.2 pesos/$ as a reference point for the devaluation, compared with an official rate of 9.8 pesos/$ in effect until today.
He said the Central Bank will intervene in the market if it devalues beyond an unspecified level.
The government is trying to counteract the inflationary effect of the devaluation with higher interest rates, a move that could spark a recession.
But Prat-Gay expressed confidence that Argentina would attract an influx of dollars as a result of the move, including some $400mn per week in grain exports that had been hoarded in anticipation of the devaluation. Earlier this week, Macri eliminated taxes on most agricultural goods.
US companies Dow Chemical and ExxonMobil made separate announcements this week of significant investments in Argentina´s emerging shale play.
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