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The government of Argentina, which is currently applying dollar exchange controls, has added two new dollar exchange rates into its arsenal: the “Qatar” and “Coldplay” dollars. However, Kristalina Georgieva, managing director of the International Monetary Fund (IMF) has made declarations against these measures, stating they are not a substitute for “sound macroeconomic policies.”
While Argentina has been applying dollar exchange control measures since some time ago, the government is establishing even more types of rates for different purposes, making it more expensive for the Argentine people to acquire certain services or goods. This time, the government has introduced two new exchange rates, popularly known as the “Qatar dollar” and “Coldplay dollar,” due to their functionality and applications.
The Qatar dollar rate will be applied to the purchases of luxury goods and services that go over the $300 mark made with credit cards outside or inside the country. The denomination is linked to the usage that many Argentines will make of this exchange rate to purchase airline tickets and pay for hotels in the upcoming Soccer World Cup, to be celebrated in Qatar.
This denomination includes a group of taxes that are already discouraging national and international tourism, according to Despegar, an Argentine online travel agency. The company stated:
Recently announced measures further discourage Argentines from traveling due to high tax burdens. Added to the constant changes in rules, which continue to affect tourism, this new measure makes it more difficult for an industry that has not yet recovered from the enormous crisis of recent years.
The second new denomination, the Coldplay dollar, is the new exchange rate that will be applied to international bands presenting events in the country. Before, companies organizing these kinds of events had access to dollars at the official rate, the cheapest denomination offered by the government. The name of this exchange rate is related to Coldplay, the pop-alternative rock band that has already sold out 10 concerts in the nation.
Organizers will have now to pay a 30% tax over the official dollar exchange rate for any event introducing an international performer, such as Coldplay. This will also affect the pockets of consumers, who will have to pay more to attend these concerts.
With the new denominations, there are currently more than 14 exchange rates for the dollar, depending on its usage. This goes against the recommendations of Kristalina Georgieva, managing director of the International Monetary Fund. When reviewing the second extended fund facility for Argentina, she stated:
While targeted FX measures can temporarily support the balance of payments, they are not a substitute for sound macroeconomic policy. As such, exchange restrictions and multiple currency practices should be unwound as conditions permit and reserve coverage strengthens.
