(Bloomberg) -- Arthur Laffer has a word of advice for Argentina: Scrap capital controls now.
“Get it done now and get it done permanently and lock it in. And you guys will find you will prosper enormously well,” Laffer, the influential supply-side economist and an adviser to US President-elect Donald Trump, said at the University of CEMA in Buenos Aires Monday. “Your country is amazing.”
Despite campaigning on it, President Javier Milei has yet to lift Argentina’s thicket of currency and capital controls that keep the peso fixed at a controlled rate against the US dollar on fear that a quick release could fan inflation, voters’ top concern. Regulations also make it impossible for most companies to take their dividends abroad.
“That’s your problem,” the 84-year-old Laffer added. “You need to get rid of all capital controls whatsoever. People need to feel very secure that if they lend you the money, if they invest in your country, they can get the money out.”
Economy Minister Luis Caputo, assured his listeners Monday at a separate event in Brazil that the restrictions would be gone in 2025, but insisted it wouldn’t make a difference for long-term investment whether they are scrapped in the first, second or third quarter. A fresh injection of cash by the International Monetary Fund to prop up the central bank’s depleted coffers, however, would “without a doubt” accelerate the process, he said.
Laffer met with Caputo Tuesday morning at the Economy Ministry and gifted him a signed copy of his book.
On the IMF, which Argentina owes $44 billion from its program, Laffer recommended abolishing the institution altogether.
“The IMF has ruined country after country after country,” he said. “The sooner we get the IMF out of your back pocket, the better off we’ll all be.”
Laffer brushed off Trump’s tariff threats as a negotiating tactic, and advised Argentina not to worry about its trade deficit with China: “Just ask yourself the question, which would you rather have, Argentinian capital in China under their political control or Chinese capital in Argentina under your political control?”
Laffer, who was an aide to President Ronald Reagan, was given the Medal of Freedom by Trump for his eponymous “curve,” which illustrates the theory that taxation beyond a certain level lowers government revenue by discouraging work.
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