Economy

Infographic: A decade of capital flight in Argentina

29th August 2019

By The Essential Staff

Infographic: A decade of capital flight in Argentina

Much of the increasingly heated political debate over the last few days has centered around Peronist criticism of the government arguing that most of the loans taken on by President Mauricio Macri’s administration has been used to “finance capital flight.”

The chart below shows the official figures for something approximating capital flight: Formation of External assets, meaning the withdrawal of cash deposits or investments from the Argentine system.

</div> <div></div> <div> <img class="wp-image-3287 aligncenter" src="https://gettheessential.com/wp-content/uploads/2019/08/external-assets-300x220.jpg" alt="The graph shows the evolution of the Formation of Foreign External Assets, an index seen as closely tracking capital flight, over the last few administrations" width="634" height="464" srcset="https://gettheessential.com/wp-content/uploads/2019/08/external-assets-300x220.jpg 300w, https://gettheessential.com/wp-content/uploads/2019/08/external-assets-768x563.jpg 768w, https://gettheessential.com/wp-content/uploads/2019/08/external-assets-1024x751.jpg 1024w, https://gettheessential.com/wp-content/uploads/2019/08/external-assets-600x440.jpg 600w" sizes="(max-width: 634px) 100vw, 634px" /> </div> <div></div> <div> <p>The figures have indeed been steadily increasing since 2015, although by 2018 they were at a similar level than the one seen during the second Cristina Fernández de Kirchner administration.</p> <p>This gap between 2012 and 2015 is explained by the so-called &#8220;cepo&#8221; (Spanish for &#8220;clamp&#8221;) on foreign currency purchases, distributions of dividends abroad and other capital movements during that period.</p> <p>The underlying problem has been evident for a decade, with both administrations finding different ways to sidestep it by either repressing capital movements or raising debt to balance the books. If both options are now out of the window, then Argentina is close to facing a painful moment of truth.</p> </div> <div>

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