Bloomberg – By Eliana Raszewski
A dollar-denominated central bank certificate created to encourage the investment of undeclared funds in Argentina’s flagging real estate market will fail to reverse a decline in transactions, according to 67 percent of respondents in a survey by website Reporte Inmobiliario.
About 30 percent of the 984 people questioned said the new instrument, created to inject funds that hadn’t been declared to the Argentine tax agency into the economy, will help boost property purchases.
Real estate transactions plunged since President Cristina Fernandez de Kirchner tightened controls on the foreign exchange market after being re-elected in October 2011. She banned purchases of dollars for savings and for real estate transactions, which traditionally are carried out in greenbacks, Reporte Inmobiliario director Jose Rozados said on the website.
Last year “was the worse since 1980 in real estate transactions in the city of Buenos Aires,” Rozados said.
Sales in the city fell 48 percent in the first quarter from the same period two years earlier, before access to dollars was restricted, according to the capital’s public notaries’ college. Construction activity has fallen in 11 of the past 13 months on a year-on-year basis, government data show.
Last week, Congress approved legislation that pardons tax dodgers who invest their undeclared funds in either the construction industry by using the central bank certificates or buy bonds that will be used to finance increased oil and gas production.
The government says the legislation will help bring part of the $160 billion Argentines hide from the authorities into the economy.
While the peso fell 7.1 percent this year to 5.2915 per dollar today, the currency in the illegal market fell 20 percent to 8.54 per dollar, according to Ambito Financiero website.
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