South American Real Estate News

Argentines have USD 250 Billion stashed outside the financial system, says INDEC

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Deposits in bank accounts abroad, safety deposit boxes at home or hidden “under the mattress,” shares, bonds all contribute to this total.

Argentines have an estimated US$250.4 billion stashed outside the domestic financial system, according to the INDEC national statistics bureau.

The figure, corresponding to the last quarter of 2020, was included in the bureau’s recent report on “Balance of payments, international investment and foreign debt” under the item of “Other investments.”

Deposits in bank accounts abroad or stored in safety deposit boxes at home or hidden “under the mattress” all contribute to this total.

This sum is over sixfold the Central Bank’s foreign currency reserves (which closed last year at US$39.387 billion).

Economists attribute this conduct to decades of instability, recession, inflation and expropriations undermining confidence in the peso as a reserve currency and in the local financial system as a safe place to deposit savings.

With regard to the third quarter of 2020, this sum increased by US$3.057 billion or 1.2 percent.

Economists warn that keeping money outside the local financial system impedes development because there can be no system of loans without savings, as well as weakening the position of the Central Bank.

Other channels have also arisen to reflect capital flight and the decision to invest abroad.

According to INDEC, Argentine “direct investments” abroad have risen to total US$40.709 billion. This item covers properties, cars and any other kind of assets or goods, increasing by US$295 million (0.07 percent) in the last quarter.

“Portfolio investments,” including funds in shares, bonds or any other kind of financial assets, total US$69.73 billion, up US$ 4.029 billion (6.1 per cent) from the third quarter of last year.

At the end of 2020, foreign debt reached US$271.505 billion, according to INDEC.

The debt thus fell by US$1.347 billion between quarters with almost two-thirds (66 percent) denominated in dollars (US$178.132 billion).

Source: N/A

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