BUENOS AIRES, Argentina — Argentina's government announced new measures on Tuesday intended to suck up undeclared dollars in response to growing pressure to abruptly devalue the nation's currency.
Economy Minister Hernan Lorenzino said the new tax-free bonds and certificates of deposit will pull into the banking system the foreign currencies that Argentines have hidden under mattresses and spirited out to illegal tax havens.
Both measures are being sent to congress for approval, presumably because enabling people to declare cash without paying criminal penalties requires the force of law.
Argentines will need to deposit these undeclared dollars at the Central Bank, which will issue CDs for the entire amounts, Central Bank President Mercedes Marco del Pont said. The bonds will pay 4 percent interest through 2017, Lorenzino said.
The money will be used to finance energy and home construction projects, generating jobs and stimulating the economy.
Both sectors have stalled, in part because speculation about future inflation and a possible devaluation has made long-term investments in Argentina too risky.
Tax chief Ricardo Echegaray said that once approved, the amnesty will last for three months, and that any person or corporation can benefit. But he also said elected officials and anyone facing money laundering probes cannot participate.
"We have a long list of people facing charges who are not eligible," Echegaray said, and named some names beginning with Lazaro Baez, a businessman close to President Cristina Fernandez and her late husband Nestor Kirchner who is the focus of a federal money laundering investigation.
Hours earlier, Fernandez ruled out any currency devaluation while she's president, and dismissed the brewing Baez scandal as election-year politics.
But many Argentines have lost faith in the peso and in her leadership as inflation soars, Central Bank reserves drop and the economy slows, hamstrung by currency controls that make doing legal business more difficult. A closely watched sign of the country's economic future is the illegal currency market, where Argentines are increasingly desperate to ditch their pesos as inflation climbs above 25 percent a year. Amid fears of a potential currency shock, they're now trading nearly 10 pesos for each dollar — close to half the official value of 5.2.
This "blue dollar" trading remains marginal compared to the overall economy, and remains beyond the government's control,