Argentina’s tourism gap, for the second straight year, is eating away at the country’s foreign currency reserves, which declined US$6.3 billion this year to a six-year low of US$37 billion.
The deficit between travelers spending abroad and what foreigners purchased in Argentina reached an astounding US$303 million during the first half of 2013 — four times the gap in the same period for 2012. Last year, the country registered an annual tourism deficit of US$89 million, the first since 2001.
Restrictions on the purchase of foreign currency implemented in 2012 have not stopped Argentine tourists swiping credit cards, not only for merchandize but also to get greenbacks at better rates than the Buenos Aires foreign exchange black market.
“It’s one of the few ways [Argentineans] have to legally access dollars,” Juan Pablo Fuentes, an economist at Moody’s Analytics told Bloomberg. “It adds to a bigger problem of capital flight and a deteriorating current account.”
Spending abroad did drop to US$1.6 billion in the first 6 months of the year, from US$1.7 billion in the same period for 2012, with President Cristina Fernández de Kirchner’s attempting to stem the deficit by increasing the tax on purchases with credit cards abroad to 20 percent from 15 percent in March. However, tourists visiting Argentina spent US$1.3 billion in the first half, the lowest since 2006, under the weight of an overvalued peso.
Source: Buenos Aires Herald. Read More »