1st LD Writethru: New Argentinean government announces decision to scrap foreign currency controls

The new government of President Mauricio Macri announced Wednesday it would eliminate foreign currency controls put in place by former president Cristina Fernandez de Kirchner.

"We've come to announce the end to foreign currency controls in Argentina," Finance Minister Alfonso Prat-Gay said at a press conference. "We will return to the foreign exchange regulations that were in place prior to the implementation of the controls in November 2011."

Argentina is also working to secure between 15 billion and 25 billion U.S. dollars in credit over the next four weeks to bolster its foreign currency reserves, state news agency Telam reported, citing the official.

To that end, Argentina's central bank was negotiating with various foreign banks, including China's central bank, said the minister.

"We inherited a complex situation. We are starting to work it out," said Prat-Gay.

Also on Wednesday, Macri, who assumed office last Thursday, announced in a televised broadcast the elimination of export taxes on certain products, including removal of export taxes for farm produce such as wheat, corn, beef, sorghum, which was one of Macri's main campaign pledges in the run up to the Nov. 22 presidential runoff.

President Macri stated that returning to an open and free market is the best way to reverse Argentina's economic fortunes.

Not everyone was happy about the changes.

According to Telam, Nicolas del Cano, the former presidential candidate for the Workers' Leftist Front, said via Twitter that axing the taxes on agricultural exports only served to allow "the agricultural oligarchy to fill their pockets."

In November 2011, shortly after winning her second mandate, Kirchner put in place firm controls on foreign currencies that forced companies and individuals to seek permission before acquiring any foreign currency. In the case of individuals, these controls meant they could only acquire foreign currencies worth up to 40 percent of their income.

In February 2012, Kirchner, who insisted that the massive controls of foreign currency were an effective way to protect Argentina's dwindling foreign reserves, added further controls stipulating that Argentinean companies earning foreign currencies abroad had to transfer these proceeds back to Argentina and sell them on the foreign exchange market. Further controls had restricted the amount of foreign currencies Argentinians could withdraw abroad with debit cards and had sought to prevent foreign currencies being spent abroad by travel agents booking tours.

Controls were further tightened in August 2013, with Argentinians only being able to buy foreign currencies a week before they travel and only in the currency of the country of destination. A tax of 15 percent was levied on e-commerce transactions paid toward other countries and it was banned to purchase property using foreign currencies swapped. These controls had become very unpopular with foreign companies. Endit