Argentine presidential front-runner says would free up dollars from first day in office

Reuters News
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Posted: Nov 10, 2015 4:11 PM

By Richard Lough and Maximiliano Rizzi

BUENOS AIRES (Reuters) - Argentine presidential front-runner Mauricio Macri, detailing on Tuesday how he would gradually dismantle capital controls if he won the run off, said he would free up dollars for new imports and remittances of dividends from his first day in office.

The center-right opposition candidate told reporters it would take longer to resolve the issues of debt accumulated by importers and profits that foreign firms have been blocked from sending home in the past.

"We will try to resolve the flow from the first day and we will see how we deal with the issue of stock," he said.

Ruling party rival Daniel Scioli, who trailed Macri by 8 points in the latest poll by Management & Fit for the Nov. 22 run-off, has also said that making dollars available to companies would be a priority.

But Scioli has warned against hastily removing capital controls as it could lead to a hemorrhaging of dollars. His advisers say it could take several years to normalize the currency market.

Macri's campaign manager, Marcos Pena, said on Tuesday there were many layers of capital controls and it was not yet clear how long it would take to dismantle them all.

Argentina's outgoing leftist president, Cristina Fernandez, imposed the controls four years ago to stem capital flight and protect the South American country's foreign reserves.

Faced with restricted access to global capital markets since its 2002 default, Argentina has relied on those reserves to prop up its currency, pay for imports and meet debt obligations. The controls worked for a while.

But the central bank has burned through hard currency trying to prop up the peso at the inflated official rate in recent months. Reserves are now languishing at a 9-year low, according to official data.

Some private economists say they are even lower, noting that reserves counted by the central bank include liabilities such as a currency swap with China. Jefferies, a U.s. investment bank, puts net reserves close to zero.

"The question that no one knows how to answer is how many reserves are actually left," Macri said. "There is a lot of credit, but much fewer actual reserves. And how many will be left by Dec. 10?"

Whoever takes office on Dec. 10 will inherit a host of economic woes such as the low reserves, double-digit inflation and a legal battle with creditors preventing Argentina from accessing global debt markets.

(Writing by Sarah Marsh; Editing by Peter Cooney)