Argentina’s Milei lifts imports controls in free trade push

Argentina’s government lifted import restrictions Tuesday while the central bank prepares to sell dollar bonds to pay down commercial debts owed abroad, advancing President Javier Milei’s free trade agenda. 

The tax authority replaced a red-tape import system Tuesday that forced many companies to seek manual approval for every shipment with a more data-based version. 

“We are normalizing as of today the import process, which was absolutely blocked, generating greater inflationary pressure and shortages,” Economy Minister Luis Caputo wrote on social media. “Government bureaucracy will no longer have the power to decide who does or doesn’t import goods.”

Short on dollars, Argentina’s previous government bottlenecked imports as it tried to sustain currency controls that kept the peso overvalued. Milei’s government devalued the peso by more than 50% in his first full week in office, while his central bank has begun building back its foreign reserves that were depleted, a key step toward normalizing trade. 

Import shortages damaged the real economy in recent months with hospitals saying they couldn’t bring in essential equipment made abroad. Even major international players, such as General Motors Co., temporarily suspended production at its car plant in October due to auto part shortages. 

As the government develops the new system for importers, the central bank is taking another step to help companies trade again. The monetary authority plans to auction Wednesday three-year dollar bonds called “Bopreal” for importers who collectively owe around $30 billion to their suppliers abroad due to capital restrictions. The bonds offer a 5% annual interest rate and aim to help the central bank absorb some pesos in the economy in a bid to ease inflation pressures. 

While Milei advances his free trade agenda, he took another austerity measure Tuesday, cutting by decree thousands of government jobs for people who started working earlier this year. Milei’s spokesman said the measure affects about 5,000 state employees but a labor union representing public sector workers put the figure at over 7,000.