BUENOS AIRES (Reuters) - Argentina’s government ended a required holding period for foreign capital in a decree published in the official gazette on Thursday, in order to attract investment with the country mired in recession.
Previously, investors had to wait 120 days to repatriate funds they had moved into Latin America’s No. 3 economy. The finance ministry said in a statement it had eliminated “the last barrier to entry of foreign capital.”
The measure was one of the first signed by Treasury Minister Nicolas Dujovne who took office this week, one year into center-right President Mauricio Macri’s term.
Macri’s administration has implemented several reforms to reintegrate Argentina back into the global economy. They include removing capital controls, relaxing reserve and deposit requirements, and ending a debt dispute with hold-out creditors.
Just last week, the central bank said it would allow forward and swap transactions on foreign currency exchange starting July 1, something that had been prohibited for the last 15 years in Argentina.
Despite the changes, a wave of investment promised by Macri has been slow to arrive, with Argentina’s economy failing to grow and inflation expected to have ended 2016 at around 40 percent. Index provider MSCI still considers Argentina a frontier rather than an emerging market.
“The total removal of forex controls for foreign investors should be considered a decisive step into the country’s progress to return to the emerging markets class,” said Zoran Milojevic, a director at brokerage Auerbach Grayson.
Still, Milojevic said some restrictions that investors want lifted, particularly a capital gains tax on equity trading, need congressional approval and are not expected to end in early 2017.
Former Finance Minister Alfonso Prat-Gay had decreased the mandatory investment holding period from 365 days to 120 days. Holding periods are aimed at preventing market speculation.
Macri asked Prat-Gay to step down last week, citing differences in management style. He split the finance minister job in two, a treasury division led by Dujovne and a finance division led by Prat-Gay’s former deputy Luis Caputo.
Dujovne, who is considered more of a fiscal hawk, has pledged a swifter decrease in the fiscal deficit and a broad tax reform.
Reporting by Hernán Nessi; and Caroline Stauffer in Buenos Aires and Dion Rabouin in New York; Editing by Bernadette Baum and Richard Chang