Who benefits from the dollar at $1,400 if not to go see the World Cup and win elections?
The Argentine government struggles to understand why business owners are not celebrating reduced employer contributions and why citizens are hesitant to use their dollars amidst currency competition.
Luis Caputo, the Argentine Minister of Economy, is perplexed as to why the governmentβs reduction of employer contributions hasn't prompted celebrations among business owners. This dissatisfaction coincides with a broader trend where Argentines are hesitant to use their dollars despite taking more than 32 billion USD home last year. An official lamented the current lack of engagement with dollars, particularly as the government prepares to implement the 'Fiscal Innocence' law, which aims to encourage the banking of undeclared dollars without penal consequences, potentially increasing the economy's liquidity.
The government's initial hopes that the recent electoral victory would significantly lower the country risk to 300 points by the year's end remain unfulfilled, prompting further anxieties about economic performance. Officials expected that simply facilitating the use of dollars or passing labor reforms would reinvigorate economic activity and garner public support, yet this optimism has not translated into action as anticipated. There is a palpable apprehension among officials regarding the effectiveness of these measures to restore momentum in a stagnant economy.
In light of these economic challenges, the government faces mounting pressure to find solutions that will not only improve currency usage among its citizens but also address broader concerns regarding economic stability and investor confidence. As the World Cup draws near, the government appears to look for avenues that would align public sentiment with national interests in sport and economy, but so far, the financial landscape remains resistant to change without active participation from all stakeholders, including everyday citizens who retain significant sums in dollars at home.