Andrés Lerner 
The market is contemplating a scenario in which President Javier Milei will try to get through the legislative elections with currency controls and without a devaluation. Will he succeed? It depends on dollars.
The capital amnesty, which started in late July, is progressing slowly, so the government won’t rule out extending the deadline for the first phase. The Central Bank is buying reserves again because there is less dollar demand from the energy sector — and, perhaps, because of a boost related to the PAIS tax.
“Teenage romance.” That’s how a major business and high-net-worth consultant described the beginning of the amnesty program. “There’s a lot of talk but little concrete action,” said an accountant who has worked with similar programs under various governments.
“The formalization of entry into the amnesty program is not yet enabled,” Marcelo Rodríguez, CEO of MR Consultores, told the Herald’s sister title, Ámbito. “It will start on October 7. The only concrete information available is the registration of special accounts for making deposits.”
The process is moving very slowly, according to sources in the sector. There are reports of operational problems and banks creating hurdles. Some are not allowing customers to make deposits more than once, or providing inaccurate information. This is reportedly leading to conflicts with brokers.
The peculiarity of this amnesty is that Congress granted the Executive the power to extend the deadlines. The government is mulling this option: since the greatest benefits are available during the first phase, those who don’t sign up then are unlikely to do so later.
The stakes are high. Caputo gave up revenue by reducing personal asset tax rates to make the regime more attractive, and plans to recover that revenue by broadening the base of taxpayers. He hopes this will increase gross reserves, although the impact on net reserves (which remain well in the negative) would be very limited and solely related to revenue collection.
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After closing July with a negative balance, the Central Bank has gone back to buying dollars, albeit not at the same pace as at the beginning of the year, accumulating more than US$500 million during August.
Regarding this change in trend, the latest report from Invertir en Bolsa (IEB) suggests there has been lower demand from the energy sector, whose payments are executed immediately, and notes a “substantial improvement in exports.”
However, the report also suggests that “the future reduction in the PAIS tax rate could be influencing this increased pace of purchases.”
The PAIS tax, created during Alberto Fernández’s term, is applied to most operations in U.S. dollars. Milei’s government increased it to 17.5% for purchasing imported goods and services, and 30% for purchases of the greenback for saving purposes. However, the government has promised to cut the rate again.
The calculation is simple: importers who can postpone foreign purchases will face a 7.5% rate compared to the current 17.5%, creating an incentive to push operations back to September.
This has reportedly provided relief to the Central Bank’s reserves in recent weeks. This is the key figure everyone is watching to see how long this exchange rate scheme can hold. Especially since, as the latest report from 1816 states, the government has entered its “the end justifies the controls” phase.
