By Saul Hudson and Nicolás Misculin
BUENOS AIRES (Reuters) – A tax amnesty in Argentina covering undeclared assets could provide as much as $80 billion to help kickstart the economy while also reducing the government’s need to issue debt, policymakers and bankers told Reuters.
The amnesty allows Argentines to disclose previously undeclared funds held abroad or at home and be taxed at a preferable rate if they invest them in the country. The amnesty runs to the end of 2016.
That could lower the amount of debt the country needs to issue, Finance Minister Alfonso Prat-Gay told a Reuters Summit on Argentina on Wednesday.
“After 2017 the schedule of maturing debt lightens significantly. (The amnesty) will allow us to overcome the final challenging year of debt maturities,” he said, without giving timetable details.
The center-right government of President Mauricio Macri took power in Argentina in December, swiftly agreeing to a deal over unpaid debt and pushing through pro-business reforms aimed at opening up the country to capital markets and attracting investment after years of protectionist rule.
But Latin America’s No. 3 economy is still expected to shrink about 1.5 percent this year, with inflation ending the year at around 40 percent.
Prat-Gay said that what the government was doing was “a work in progress.”
“There is no alternative but growth in Argentina,” he said. “Inflation is starting to come down. (Gradual changes) are the only possible path.”
Speakers at the Reuters Summit pointed to the amnesty as key to getting investment going.
“This is going to be incredibly more successful than any other Argentine amnesty, or any from the region,” said Facundo Gomez Minujin, executive director of the local arm of JP Morgan. Estimating how much the amnesty would bring in is difficult but it could reach $50 billion, he said.
Gabriel Martino, president of HSBC Bank Argentina, put the possible figure of declared funds at between $60 billion and $80 billion. He added that would not all immediately translate into investment in Argentina, but would be “open” for the future.
“It will be the Argentine way – all in the last two weeks of December,” he said.
Transparency agreements between countries that come into effect next year will encourage stragglers, said Mariano Federici, head of the government’s financial information agency.
“All the time more doors are closing for those who want to comfortably save money or wealth offshore, off the state radar,” he said.
((Additional reporting by Walter Bianchi; Writing by Rosalba O’Brien; Editing by Frances Kerry and Tom Brown))