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.”
Argentina Introduces ‘Qatar’ and ‘Coldplay’ Into Its Dollar Exchange Rate Arsenal
While Argentina is known for its dollar exchange controls since a long time, the government has introduced new rates that are more suitable for specific purposes. It will make it more difficult for Argentine citizens to obtain certain products or services. 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.
Qatari dollar rates will apply to luxury purchases exceeding $300 made using credit cards from outside the country or within the country. It is linked to how many Argentines plan to use the Qatar dollar rate to pay for their hotel stays and purchase tickets for the upcoming Soccer World Cup.
Despegar, an Argentine-based online travel agency, stated that this tax includes a set of taxes which are currently discouraged from international and national tourism. According to the company:
Recent measures discourage Argentines traveling because of the high taxes. This measure is in addition to constantly changing rules which still affect tourism, making it harder for an industry that hasn’t recovered from the huge crisis of the past years.
Coldplay Dollar warnings
Coldplay dollar is the second currency that has been introduced. This exchange rate will be used to pay international artists who present concerts in the country. Companies organizing such events used to have access to dollars at an official rate. This was the lowest denomination that the government offered. Coldplay is the pop-alternative music band, whose 10 sold-out concerts have inspired the name of the exchange rate.
For any international act, organizers will now have to pay 30% more than the dollar exchange rate. Consumers will be forced to spend more money to see these shows.
With these new denominations there are now more than 14 currency rates available for the dollar depending on how it is used. Kristalina Georgieva (managing director, International Monetary Fund) stated that this is contrary to her recommendations. She stated that she was reviewing Argentina’s second extended-fund facility.
Although targeted FX actions can temporarily boost the balance of payments they cannot replace sound macroeconomic policies. Therefore, multiple currency practice and exchange restrictions should be dismantled as long as the conditions allow and that reserve coverage increases.
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