Argentina prepares to restrict imports amid foreign exchange shortage

Argentina’s government will launch three measures in the coming days aimed at restricting imports and preserving the central bank’s dwindling foreign currency reserves, a source said.

The measures come as new data on Monday showed a trade deficit in July of $437 million, the second deficit in a row for Latin America’s third-largest economy.

“Smoother coordination is required between (Argentina’s tax collection entity) AFIP, Customs and Commerce, with measures aimed at ordering imports, taking care of the Argentine central bank’s dollars and avoiding abuses,” said the source, who asked not to be identified.

Argentina’s exports in the first seven months of the year increased by 22.4% compared to the same period in 2021, while imports jumped 44.6%.

One of the measures seeks to accelerate exports by reducing the time frame for those who import goods without paying taxes. The measure will reduce the time to export the goods to 120 days from 360.

This is the case of soybeans, which are imported in order to later be exported as oil.

The 115% gap between the official exchange rate used in foreign trade and the exchange rates in alternative markets encourages importers to increase their purchases from abroad, while exporters delay their settlements pending a further fall in the peso.

The government also contemplates making companies that import services such as software or consultancies enter an advanced declaration scheme.

In the first half of the year, Argentina imported services worth $5 billion.

President Alberto Fernandez’s administration will also seek to curb imports of 34 goods, including slot machines, yachts, luxury planes and cryptocurrency mining machines, by incorporating them into a non-automatic licensing scheme, which requires prior authorization.