Argentina’s inflation reached another peak in June, at 5.3%, according to data released this Thursday (14) by Indec (the country’s statistics institute). In 12 months, the accumulated increase is 64%, and consultancies already project that the percentage could reach 90% by the end of the year.
The result is announced in another day of protests in downtown Buenos Aires. Protesters took to the streets to demand price controls and more social plans. In the late afternoon, they positioned themselves in front of the Ministry of Economy building, asking to speak with the new minister, Silvina Batakis. This one, however, did not want to receive them.
The Argentine crisis worsened with the departure of Martín Guzmán from the Ministry of Economy on July 3rd. Guzmán resigned amid a clash between President Alberto Fernández and his deputy, Cristina Kirchner. Both disagree on how to face the moment and have been criticizing Guzmán. The minister was responsible for the renegotiation of the country’s debt with the IMF (International Monetary Fund), of US$ 44 billion.
Guzmán defended an adjustment in energy bills and for the country to contain currency issuance, which has been reinforced since the beginning of the pandemic for subsidies and social assistance. The deputy, Cristina Kirchner, is against this vision, and defends more monetary issuance for social aid in the midst of the crisis.
Guzmán’s replacement, Batakis, was once a minister for the province of Buenos Aires and is known for having a more unorthodox profile. Her first message, however, was that the country would not “spend more than it has” and that there would be fiscal responsibility.
This Wednesday (14), Batakis tightened the siege a little more on the dollar, increasing the tax on the purchase of foreign currency for international travel and spending abroad.
Today, in Argentina, there are two types of exchange. In the official one, US$ 1 can be bought for 125 Argentine pesos; on the parallel, for 290 pesos. Access to the official dollar, however, is very restricted. A person can buy dollars at that amount up to a maximum of $200 per month. In this way, the so-called “blue” dollar, or parallel, is in high demand, and this causes inflation because merchants mark up prices using this value as a reference.
Batakis said the new measure is in line with the government’s perception that international travel by Argentines harms the country’s economy.
“The right to travel collides with the generation of jobs. The dollar is a scarce resource and these dollars must be available to the productive matrix”, he said.
Batakis added that “when someone makes purchases abroad, it negatively affects the productive sector and the future of Argentines. All people have the right to vacations, but we have to manage our reserves so that the country grows. get to know our country more,” he said.
The rise of the so-called “credit card dollar” has caused concern among airlines. The Chamber of Airlines of Argentina, which groups foreign companies, said that the government’s decision could further impact the value of air tickets for Argentines.
