In a fact that reinforces the Government’s concerns, the foreign exchange deficit via tourism was a record in June and amounted to US$ 655 million. When reviewing what happened in the first semester, the red for this segment exceeded US$ 3,000 million and motivated the decisions made by the Central Bank (BCRA) to restrict the bleeding of foreign currency.
According to the latest Exchange Balance report released by the BCRA, the deficit in the “travel, ticket and other card payments” account amounted to US$655 million in June, the highest value so far this year, and accumulated a negative balance of 3,115 million in the first half. If compared year-on-year, the red for the first half of 2021 had been US$861 million, for which the deficit increased by around 280%.
While all the people leaving Argentina spent with their credit card at the rate of the “tourist dollar” (surcharge of 30% of the PAIS tax and 35% of a withholding on account of the income tax), those who arrive the country do not usually change their money in the formal market. For every dollar they can get an extremely higher yield of pesos in a cave than in a bank.
According to official sources, The uncoveringDuring 2022, a total of approximately 1,400 million dollars entered the country from receptive tourism. However, of that number only 16% was sold by these tourists in the formal marketthat is, about 224 million dollars. The rest, some 1,176 million, were sold by foreign tourists in the illegal blue dollar market.
Throughout 2022, the deficit curve has increased steadily: it started with 414 million dollars in January, 443 million in February, 517 million in March, 507 million in April, 579 million in May and 655 million in June. In the transfers made abroad to cancel the balances with the international card issuing companies registered in this account, both the consumptions made for trips abroad and the non-face-to-face purchases from foreign suppliers are included.
Since 2011, Argentina maintains a negative balance in terms of tourism: The outflow of dollars for trips abroad by residents of the country is higher than the foreign exchange earnings by foreign tourists. According to a report from the Production Studies Center of the Ministry of Productive Development, the accumulated tourism deficit between 2011 and 2020 was US$23.5 billion. With the suspension of travel due to the coronavirus pandemic, the deficit fell to US$1.7 billion, but as of 2021 the gap widened and in 2022 it deepened.
The Government seeks to close the tap
Noticed by the strong outflow of dollars and the pressure it exerts on the illegal exchange rate, the Government began to outline measures at the end of June. First, The Central restricted the possibility of paying in installments with credit cards for consumption made in duty-free stores or free shops. In this way, the prohibition that was already in force for the sale in quotas of tickets and tourist services abroad and of products from abroad that are received through the door-to-door system was extended.
Subsequently, it approved a regulation that enables banks and exchange houses to exchange currency for foreign tourists for an amount of up to US$5,000 at the MEP dollar exchange rate, as a way of capturing, through institutional channels, an operation that It is carried out mainly in the informal market. Sources from the monetary authority clarified that “the reference dollar is the MEP” since the dollar counted with liquidation is for operations with the entry or exit of foreign currency to the country, something that does not apply in this context.
When an operation is carried out with CCL, what is done is to buy a bond in pesos in Argentina and sell it in exchange for dollars abroad. The dollars are left abroad, while in the case of the MEP dollar the operation is similar but the dollars are deposited in Argentina.
In parallel, the AFIP announced a 10% increase of the perception on account of taxes on Income and on Personal Assets for operations destined to the consumption of dollars for trips and expenses abroad, whose rate went from 35% to 45%.