New Argentina government aims to dismantle currency controls December 14

BUENOS AIRES (Reuters) - The government of Argentina’s president-elect Mauricio Macri said Sunday that it will seek to dismantle a series of capital controls propping up the peso as soon as possible, aiming for December 14 if the central bank is under new management.

Slideshow ( 2 images )

Macri has previously demured on giving details on his strategy to lift outgoing president Cristina Fernandez’ so-called “clamp-down” on dollar purchases that has created a multi-tiered exchange rate, saying he must first take a close look at the true state of national accounts.

But incoming finance minister Alfonso Prat-Gay said in an interview with three local dailies that doing so was a top priority to tackle soon after the transfer of power Dec. 10, despite the possibility of a sharp devaluation.

“The program to unify the currency market is the first signal for the economy to start to normalize. We’re going to fulfill that promise as fast and as exhaustively as possible,” Prat-Gay was quoted saying in newspapers La Nacion, Perfil and Clarin.

“If we can do it the 14th, we’ll do it the 14th, and if not, we’ll do it once we see the right conditions,” he said.

Prat-Gay said currency reform could probably only begin once a new central bank chief assumes power and it is clear there will be a sufficient supply of dollars. He added that he hopes to make an announcement soon on a new source of hard currency that will help the bank restore its dwindling reserves.

Current capital controls include strict limits on dollar savings, restrictions on imports and a hefty tax on credit card use abroad.

Prat-Gay did not specify whether the government would seek to undo the controls all at once or bit-by-bit. He could not be reached for comment Sunday.

Prat-Gay was global head of foreign-exchange research at JP Morgan in the late 1990s before leading Argentina’s central bank between 2002 and 2004. Macri picked him to help him end more than a decade of free-spending populism that has hobbled growth and stoked inflation in Latin America’s third largest economy.

Central bank president Alejandro Vanoli is expected to resign in coming days, under pressure from Macri to make way for a currency devaluation to spur exports and halt the drain on central bank reserves used to prop up the peso.

Macri plans to appoint former Buenos Aires city bank chief Federico Sturzenegger to head the bank.

Reporting by Juliana Castilla; Writing by Mitra Taj; Editing by Mark Potter and Andrew Hay