Argentine Tax Amnesty May Increase Government Revenue, Says Finance Minister – Reuters

By Saul Hudson and Nicolás Misculin

BUENOS AIRES – Argentina may decrease its reliance on issuing new debt based on the financial boost anticipated from a recently enacted tax amnesty, according to Finance Minister Alfonso Prat-Gay.

Economists project that the amnesty, which allows Argentines to declare previously unreported funds at reduced tax rates if they reinvest them domestically, could generate between $40 billion and $80 billion.

Prat-Gay noted that the need for the country to issue more debt will be largely contingent on the effectiveness of the amnesty program during a Reuters Summit focused on Argentina. "After 2017, the schedule of maturing debt lightens significantly. The amnesty will enable us to navigate the final challenging year of debt repayments," he stated.

The amnesty is set to last until the end of 2016, but Prat-Gay did not provide a specific timeline for when the government would assess its impact on debt issuance plans.

Since assuming office in December, President Mauricio Macri’s center-right government has made strides towards resolving unpaid debt and implementing pro-business reforms aimed at opening the economy to outside investment after a prolonged period of protectionist policies.

Despite these efforts, Latin America’s third-largest economy is projected to contract by roughly 1.5 percent this year, with inflation expected to reach around 40 percent by year-end.

Prat-Gay emphasized that the government’s endeavors represent "a work in progress." "There is no alternative but growth in Argentina," he remarked. "Inflation is beginning to decline. Gradual adjustments are the only viable path. Our success will hinge on avoiding a crisis."

He also revealed that approximately $30 billion in investments have been announced over the past four months. Additionally, Prat-Gay indicated that the government plans to introduce a bill to Congress aimed at modifying capital markets in the coming weeks, although he did not provide further details.