Argentina Turns the Screws on Dollar Payments

Argentina has imposed an additional 10% tax on card payments made in foreign currencies, making foreign tours far more expensive for local residents.

This additional tax takes the so-called “tourist dollar tax” from the previous 35% to 45%.

This is just one of the government’s attempts to protect its foreign currency reserve, which is shrinking rapidly in the face of sky-high inflation and a weak economic climate.

A similar measure implemented a few weeks ago prevented tourists from paying in installments for purchases in duty-free shops.

It is expected that the new measure will greatly affect citizens traveling abroad or making purchases overseas.

Furthermore, analysts see it boosting the parallel foreign exchange, where the value of a US dollar is almost double the value of the greenback in the official exchange.

The announcement comes just weeks after Silvina Batakis replaced Martin Guzmán as the country’s new Finance Minister. Guzmán quit his post in early July.

Argentina’s economy has long been in the doldrums, thanks largely to decades of economic mismanagement. The once-wealthy country even became a pariah in the international money market after defaulting on bond payments and calling a few US bond buyers “vulture funds”.

Three years ago, the International Monetary Fund (IMF) greenlit a US$50 billion loan for Argentina, under certain conditions. Accumulating foreign currency reserves is one of the conditions the country agreed to.